Deck 5: Forecasting

Question 1

The trend component of a time series captures whether the level of the variable of interest is generally increasing or decreasing over time.

Answer 1

True

Question 2

A season represents a longer period of time than a cycle.

Answer 2

False

Question 3

Four components of time series are trend, moving average, exponential smoothing, and seasonality.

Answer 3

False

Question 4

Time series models enable the forecaster to include specific representations of various qualitative and quantitative factors.

Question 5

A scatter diagram for a time series may be plotted on a two-dimensional graph with the horizontal axis representing the variable to be forecast (such as sales).

Question 6

The naïve forecast for the next period is the actual value observed in the current period.

Question 7

Scatter diagrams can be useful in spotting trends or cycles in data over time.

Question 8

In a weighted moving average, the weights assigned must sum to 1.

Question 9

The most common quantitative causal model is regression analysis.

Question 10

The three categories of forecasting models are time series, quantitative, and qualitative.

Question 11

Time series models extrapolate historical data from the variable of interest.

Question 12

The fewer the periods over which one takes a moving average, the more accurately the resulting forecast mirrors the actual data of the most recent time periods.

Question 13

Exponential smoothing cannot be used for data with a trend.

Question 14

An exponential forecasting method is a time series forecasting method.

Question 15

A time series exhibiting only random variations is best fit by a horizontal line.

Question 16

The Delphi method of forecasting is both iterative and qualitative.

Question 17

Time series models rely on judgment in an attempt to incorporate qualitative or subjective factors into the forecasting model.

Question 18

A trend-projection forecasting method is a causal forecasting method.

Question 19

The sales force composite method of forecasting uses the opinions of customers or potential customers regarding their future purchasing plans.

Question 20

Mean absolute deviation (MAD)is simply the sum of forecast errors.

Question 21

An advantage of exponential smoothing over a simple moving average is that exponential smoothing requires one to retain less data.

Question 22

Which of the following is a technique used to determine forecasting accuracy?

A)exponential smoothing
B)regression
C)Delphi method
D)mean absolute percent error

Question 23

A graphical plot with sales on the Y axis and time on the X axis is a

A)scatter diagram.
B)trend projection.
C)radar chart.
D)line graph.

Question 24

Multiple regression may be used to forecast both trend and seasonal components present in a time series.

Question 25

When is the exponential smoothing model equivalent to the naïve forecasting model?

A)α = 0
B)α = 0.5
C)α = 1
D)never

Question 26

When the smoothing constant α = 1, the exponential smoothing model is equivalent to the naïve forecasting model.

Question 27

When the smoothing constant α = 0, the exponential smoothing model is equivalent to the naïve forecasting model.

Question 28

Bias is the average error of a forecast model.

Question 29

The exponential smoothing with trend model uses two smoothing constants, one constant works as in the exponential smoothing model and the other adjusts the line for presence of a trend.

Question 30

Which of the following is not classified as a qualitative forecasting model?

A)exponential smoothing
B)Delphi method
C)jury of executive opinion
D)sales force composite

Question 31

A seasonal index must be between -1 and +1.

Question 32

Multiple regression models use dummy variables to adjust for seasonal variations in an additive TIME SERIES model.

Question 33

Deseasonalized data can be modeled as a straight line.

Question 34

Multiple regression can be used to develop a multiplicative decomposition model.

Question 35

Which of the following statements about scatter diagrams is true?

A)Time is always plotted on the y-axis.
B)It can depict the relationship among three variables simultaneously.
C)It is helpful when forecasting with qualitative data.
D)The variable to be forecasted is placed on the y-axis.

Question 36

Enrollment in a particular class for the last four semesters has been 120, 126, 110, and 130.Suppose a one-semester moving average was used to forecast enrollment (this is sometimes referred to as a naïve forecast).Thus, the forecast for the second semester would be 120, for the third semester it would be 126, and for the last semester it would be 110.What would the MSE be for this situation?

A)196.00
B)230.67
C)100.00
D)42.00

Question 37

A judgmental forecasting technique that uses decision makers, staff personnel, and respondent to determine a forecast is called

A)exponential smoothing.
B)the Delphi method.
C)jury of executive opinion.
D)sales force composite.

Question 38

In a second order exponential smoothing, a low β gives less weight to more recent trends.

Question 39

Adaptive smoothing is analogous to exponential smoothing where the coefficients α and β are periodically updated to improve the forecast.

Question 40

Which of the following is considered a causal method of forecasting?

A)exponential smoothing
B)moving average
C)linear regression
D)Delphi method

Question 41

Which of the following methods tells whether the forecast tends to be too high or too low?

A)MAD
B)MSE
C)MAPE
D)bias

Question 42

Which of the following methods gives an indication of the percentage of forecast error?

A)MAD
B)MSE
C)MAPE
D)decomposition

Question 43

A TIME SERIES forecasting model in which the forecast for the next period is the actual value for the current period is the

A)Delphi model.
B)Holt's model.
C)naïve model.
D)exponential smoothing model.

Question 44

Sales for boxes of Girl Scout cookies over a 4-month period were forecasted as follows: 100, 120, 115, and 123.The actual results over the 4-month period were as follows: 110, 114, 119, 115.What was the MAD of the 4-month forecast?

A)0
B)5
C)7
D)108

Question 45

As one increases the number of periods used in the calculation of a moving average

A)greater emphasis is placed on more recent data.
B)less emphasis is placed on more recent data.
C)the emphasis placed on more recent data remains the same.
D)it requires a computer to automate the calculations.

Question 46

Which of the following statements about the decomposition method is false?

A)The process of "deseasonalizing" involves multiplying by a seasonal index.
B)Dummy variables are used in a regression model as part of an additive approach to seasonality.
C)Computing seasonal indices is the first step of the decomposition method.
D)Data is "deseasonalized" after the trend line is found.

Question 47

Enrollment in a particular class for the last four semesters has been 122, 128, 100, and 155 (listed from oldest to most recent).The best forecast of enrollment next semester, based on a three-semester moving average, would be

A)116.7.
B)168.3.
C)135.0.
D)127.7.

Question 48

The process of isolating linear trend and seasonal factors to develop more accurate forecasts is called

A)regression.
B)decomposition.
C)smoothing.
D)monitoring.

Question 49

Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent).Forecast sales for the next day using a two-day weighted moving average where the weights are 3 and 1.

A)14.5
B)13.5
C)14
D)12.25

Question 50

Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent).Forecast sales for the next day using a three-day weighted moving average where the weights are 3, 1, and 1 (the highest weight is for the most recent number).

A)12.8
B)13.0
C)70.0
D)14.0

Question 51

Assume that you have tried three different forecasting models.For the first, the MAD = 2.5, for the second, the MSE = 10.5, and for the third, the MAPE = 2.7.We can then say

A)the third method is the best.
B)the second method is the best.
C)method two is the least preferred.
D)We cannot make a determination as to which method is best.

Question 52

Which of the following methods produces a particularly stiff penalty in periods with large forecast errors?

A)MAD
B)MSE
C)MAPE
D)decomposition

Question 53

Which of the following is not considered one of the steps to developing the decomposition method?

A)compute seasonal indices using CMAs
B)find the equation of the trend line using the deseasonalized data
C)forecast for future periods using the trend line
D)add the seasonal index to the trend forecast

Question 54

Demand for soccer balls at a new sporting goods store is forecasted using the following regression equation: Y = 98 + 2.2X where X is the number of months that the store has been in existence.
Let April be represented by X = 4.April is assumed to have a seasonality index of 1.15.What is the forecast for soccer ball demand for the month of April (rounded to the nearest integer)?

A)123
B)107
C)100
D)115

Question 55

Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent).Forecast sales for the next day using a two-day moving average.

A)14
B)13
C)15
D)28

Question 56

Enrollment in a particular class for the last four semesters has been 120, 126, 110, and 130 (listed from oldest to most recent).Develop a forecast of enrollment next semester using exponential smoothing with an alpha = 0.2.Assume that an initial forecast for the first semester was 120 (so the forecast and the actual were the same).

A)118.96
B)121.17
C)130
D)120

Question 57

Which of the following is not considered to be one of the components of a time series?

A)trend
B)seasonality
C)variance
D)cycles

Question 58

In picking the smoothing constant for an exponential smoothing model, we should look for a value that

A)produces a nice-looking curve.
B)equals the utility level that matches with our degree of risk aversion.
C)produces values which compare well with actual values based on a standard measure of error.
D)causes the least computational effort.

Question 59

A method to measure how well predictions fit actual data is

A)decomposition
B)smoothing
C)tracking signal
D)regression

Question 60

Sales for boxes of Girl Scout cookies over a 4-month period were forecasted as follows: 100, 120, 115, and 123.The actual results over the 4-month period were as follows: 110, 114, 119, 115.What was the MSE of the 4-month forecast?

A)0
B)5
C)7
D)54

Question 61

Consider the actual and forecast values contained in the table. At which observation is the tracking signal at its maximum value?

A)Observation #5
B)Observation #7
C)Observation #4
D)Observation #6

Question 62

A tracking signal was calculated for a particular set of demand forecasts.This tracking signal was positive.This would indicate that

A)demand is greater than the forecast.
B)demand is less than the forecast.
C)demand is equal to the forecast.
D)the MAD is negative.

Question 63

Demand for Y is shown in the table. What is the slope of the appropriate trend equation?

A)14.38
B)2.88
C)11.28
D)5.48

Question 64

Consider the actual and forecast values contained in the table. What is the MAD?

A)3.99
B)3.93
C)3.86
D)3.79

Question 65

Consider the actual and forecast values contained in the table. What is the MAPE of the forecast?

A)2.92%
B)3.08%
C)3.17%
D)3.26%

Question 66

The computer monitoring of tracking signals and self-adjustment is referred to as

A)exponential smoothing.
B)adaptive smoothing.
C)trend projections.
D)trend smoothing.

Question 67

Demand for Y is shown in the table. What is the intercept of the appropriate trend equation?

A)14.38
B)2.88
C)11.28
D)5.48

Question 68

In the exponential smoothing with trend adjustment forecasting method, β is the

A)new forecast.
B)Y-axis intercept.
C)independent variable.
D)trend smoothing constant.

Question 69

Consider the actual and forecast values contained in the table. What is the MAPE?

A)5.92%
B)6.02%
C)6.12%
D)6.22%

Question 70

Consider the actual and forecast values contained in the table. What is the MAD of the forecast?

A)0.60
B)0.65
C)0.70
D)0.75

Question 71

Which of the following is not a characteristic of trend projections?

A)The variable being predicted is the Y variable.
B)Time is the X variable.
C)It is useful for predicting the value of one variable based on time trend.
D)A negative intercept term always implies that the dependent variable is decreasing over time.

Question 72

Using the additive decomposition model, what would be the period 2, Q3 forecast using the following equation: = 20 + 3.2X₁ + 1.5X₂ + 0.8X₃ + 0.6X₄?

A)23.2
B)25
C)27
D)27.2

Question 73

Consider the actual and forecast values contained in the table. What is the MSE of the forecast?

A)0.369
B)0.468
C)0.573
D)0.624

Question 74

The errors in a particular forecast are as follows: 4, -3, 2, 5, -1.What is the tracking signal of the forecast?

A)0.4286
B)2.3333
C)5
D)1.4

Question 75

Consider the actual and forecast values contained in the table. What is the bias?

A)-0.5
B)0
C)1.33
D)1.75

Question 76

If the Q1 demand for a particular year is 200 and the seasonal index is 0.85, what is the deseasonalized demand value for Q1?

A)170
B)185
C)215
D)235.29

Question 77

Consider the actual and forecast values contained in the table. What is the tracking signal for the 5th point in the series (actual = 22 & forecast = 21.7)?

A)-0.833
B)-1.333
C)0.833
D)1.333

Question 78

A seasonal index of ________ indicates that the season is average.

A)10
B)0.5
C)0
D)1

Question 79

Consider the actual and forecast values contained in the table. What is the bias of the forecast?

A)0.01
B)0.06
C)0.09
D)0.13

Question 80

Consider the actual and forecast values contained in the table. At which observation is the tracking signal at its maximum value?

A)Observation #5
B)Observation #7
C)Observation #4
D)Observation #6