CPIM Practice Exam

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What is the primary goal of demand planning?

To predict future sales and production quantities
To eliminate all forms of inventory
To reduce costs associated with supply chain operations
To identify trends in market competition

The correct answer is: To predict future sales and production quantities

The primary goal of demand planning is to predict future sales and production quantities. This process involves analyzing historical sales data, market trends, and customer demand to generate accurate forecasts. By understanding anticipated demand, organizations can effectively plan their production schedules, manage inventory levels, and allocate resources efficiently. This ensures that they are well-prepared to meet customer needs without overproducing or facing stockouts, which can negatively impact both revenue and customer satisfaction. Effective demand planning is critical as it aligns the supply chain initiatives with actual market demand, helping to create a more responsive and agile business environment. This consistent alignment enables organizations to make informed decisions based on reliable forecasts, significantly benefiting their operational performance.