Deck 8: Demand Management and Forecasting

Question 1

A manufacturer of printers introduces a new product to the market and produces the product in its new manufacturing facility in Texas.When employees become familiar with producing a particular product and as newer products are introduced,the production of mature products is moved to partners in Mexico to accommodate production of the new product line.The manufacturer is using a practice called

A)channel management.
B)counterseasonal production.
C)product phasing.
D)product churn.

Answer 1

C

Question 2

For a retailer,ski jackets and snow shovels are counterseasonal products.

Answer 2

False

Question 3

What is the demand pattern that can be used to describe the sales of General Motor's mid-size sedan model car that shows a general fluctuation in sales from month to month?

A)Irregular component
B)Trend
C)Cyclical
D)Seasonal movement

Answer 3

A

Question 4

An assertion about the future whose outcome you have not yet seen is called a ________.

Question 5

In the context of demand management,the loss and replacement of customers is known as churn.

Question 6

For an apparel manufacturer,ski jackets and swimwear are examples of ________ products.

Question 7

Using different marketing channels to complement each order in order to level demand is known as ________.

Question 8

The practice of hotels and resorts offering off-season discounts for slow periods is a form of demand management.

Question 9

A forecast is an assertion about the future whose outcome is known.

Question 10

Introducing new products in a sequence that allows for an effective use of capacity is known as ________.

Question 11

In the context of demand management,the loss and replacement of customers is known as ________.

Question 12

Menchie's Landscaping service routinely provides lawn fertilization services to their customers.It has been forecasted that they will be fertilizing 250 customer lawns in the upcoming season.Each lawn requires an average of 20 lbs.of fertilizer.What term can be used to describe the demand for the fertilizer?

A)Sporadic demand
B)Independent demand
C)Co-variance demand
D)Dependent demand

Question 13

Vitamix,a producer of high quality blenders which has a seasonal demand,sells the product through in-store demonstrations at other retail partner stores during the holiday season.During the rest of the year,they use company-owned stores and their online website to sell the product.The company is using a practice called

A)channel management.
B)counterseasonal production.
C)product phasing.
D)product churn.

Question 14

Demand that is calculated from a parent item is called independent demand.

Question 15

Which of the following practices is a form of demand management?

A)Hotels offering off-season discounts
B)A restaurant reducing capacity during the afternoon lean hours
C)Theatres pricing matinee shows at a lower price
D)All of the above
E)A and C only

Question 16

A proactive balancing of scarce business resources with demand is known as ________.

Question 17

What is the bullwhip effect in supply chains?

A)It is the point at which the total cost is equal to the total revenue.
B)It is a technique applied to manage projects in a supply chain.
C)It is the sharing of data on a continuous basis between the supplier and customer.
D)It is the increasing upstream supply chain variation resulting from forecasts in a supply chain.

Question 18

Discuss how social demand and information available on the Internet can aid a manager in forecasting.

Question 19

To reduce inventory variability in the supply chain and to better match demand with supply at various stages in the supply chain,which of the following two practices are effective?

A)Communication
B)Longer lead-times
C)Collaboration
D)Quantity discounts

Question 20

Demand that is calculated from a parent item is called ________.

Question 21

Variation patterns that are repetitive and occur at the same fixed time period are known as seasonal patterns.

Question 22

Which of the following is not a step in the forecasting process?

A)Identify the purpose for the forecast
B)Determine the time horizon for the forecast
C)Determine feasible capacity levels
D)Select a forecasting technique

Question 23

The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast.

Question 24

The increasing upstream supply chain variation resulting from forecasts in a supply chain or distribution channel is known as ________.

Question 25

The random variation that occurs in any time series is known as the ________ component.

Question 26

In the forecasting process,the step of selecting a forecasting technique occurs before determining the time horizon for the forecast.

Question 27

The bullwhip effect indicates that the variation in demand will be higher with the retailer as compared to the manufacturer in a supply chain.

Question 28

The average rate of change in a time series data is known as churn.

Question 29

The average rate of change in a time series data is known as ________.

Question 30

What is the demand pattern that can be used to describe the demand for NFL merchandise around the Super Bowl every year?

A)Random
B)Trend
C)Cycle
D)Seasonal pattern

Question 31

Forecasts based on judgment and opinion do not include which of the following?

A)Customer surveys
B)Delphi method
C)Averaging techniques
D)Greenfield forecasting

Question 32

Which of the following forecasting approach is appropriate for new product launches?

A)Greenfield forecasting
B)String method
C)Time series forecasting
D)Linear regression

Question 33

What is the demand pattern that can be used to describe the drop in demand for consumer products that coincides with economic recession periods?

A)Random
B)Trend
C)Cycle
D)Seasonal pattern

Question 34

A long-term,repetitive pattern in a time series that is often macroeconomic in nature is known as trend.

Question 35

Variation patterns that are repetitive and occur at the same fixed time period are known as ________.

Question 36

Long-term,repetitive patterns in a time series that are often macroeconomic in nature are known as ________.

Question 37

As per the bullwhip effect,which member of the supply chain will see the largest variation in demand along the supply chain?

A)Consumer
B)Retailer
C)Wholesaler
D)Manufacturer

Question 38

What will be the forecast for the month of October using a 3-period moving average and weights of 0.2,0.3 and 0.5,if the demand during the months of May,June,July,August and September was 200,180,210,200 and 220 respectively? (The desire is to have the most recent data influence the forecast most strongly. )

A)200
B)207
C)212
D)225

Question 39

Which forecasting method is commonly used by going to the market to get information for new product launches?

A)Delphi method
B)String method
C)Time series forecasting
D)Grassroots forecasting

Question 40

The forecasting method which uses an iterative process in which individuals develop their own forecast and then share them among each other and again revise their forecast until a consensus is reached is

A)delphi method.
B)consumer surveys.
C)time series analysis method.
D)string method.

Question 41

The naive approach to forecasting makes use of the linear regression technique.

Question 42

The Mean Absolute Deviation (MAD)is equal to the square root of the Mean Squared Error (MSE).

Question 43

Which of the following forecast error measures will help determine whether or not there is a bias in a forecast?

A)Forecast error
B)Absolute deviation
C)Square error
D)Control error

Question 44

In forecasting,what is the Mean Absolute Deviation (MAD)?

A)It is the difference between the forecast and actual demand.
B)It is the average,absolute difference between the forecast and actual demand.
C)It is the absolute error as a percentage of demand.
D)It is the per-period average of cumulative error.

Question 45

What is the Mean Absolute Deviation (MAD)if the sum of the absolute forecast error over 12 periods is 174?

A)10.5
B)12
C)14.5
D)16

Question 46

An advantage of the weighted moving average technique is that recent demand periods can be given more importance than older demand periods.

Question 47

Forecasting techniques such as moving averages and exponential smoothing represent smoothed (averaged)values of the historical time series data.

Question 48

When new products show a steady increase in sales,a low alpha value for the smoothing constant should be used in conjunction with the exponential smoothing technique in order to minimize forecast errors.

Question 49

In forecasting,what is the Mean Absolute Percent Error (MAPE)?

A)It is the difference between the forecast and actual demand.
B)It is the average,absolute difference between the forecast and actual demand.
C)It is the absolute error as a percentage of demand.
D)It is the per-period average of cumulative error.

Question 50

What will be the forecast for the month of October using an exponential smoothing technique and a smoothing constant of 0.2,if the demand during the months of August and September was 200 and 220 respectively and the forecast for the month of August was 180?

A)185.6
B)191.2
C)198.7
D)205.5

Question 51

In measuring the forecast accuracy,bias is measured by the cumulative sum of forecast errors.

Question 52

NextGenTabs has introduced their latest model of tablet computers and these have been very well received and popular in the market.NextGenTabs has seen the demand for their tablet computers showing a steady increase month over month for the last six months.In using an exponential smoothing forecasting technique to forecast demand for future periods,NextGenTabs should use a smoothing constant (α)that is

A)low.
B)high.
C)random.
D)variable.

Question 53

For the current period,given an actual demand of 105,a forecasted value of 97,and an alpha of 0.4,the simple exponential smoothing forecast for the next period would be

A)80.8.
B)93.8.
C)100.2.
D)108.2.

Question 54

A moving average forecast is more responsive to changes in the historical demand when a higher value of n is used-i.e. ,when more demand periods are used in computing the forecast.

Question 55

The double exponential smoothing technique requires the use of two smoothing constants.

Question 56

A forecast method is generally said to be accurate when the errors exhibit an identifiable pattern.

Question 57

A smoothing constant of 0.2 will cause the exponential smoothing forecasting technique to react more quickly to a sudden change in historical demand as compared to using a smoothing constant value of 0.7.

Question 58

The double smoothing technique adds twice the forecast error to last period's actual demand to arrive at a forecast.

Question 59

Bias exists when the forecast tends to be greater or less than the actual demand.

Question 60

The exponential smoothing forecasting technique is a form of weighted moving average.

Question 61

The following table provides demand and forecast information for a specialty store's products which are particularly popular around Halloween.

What is the seasonally adjusted forecast for Spring 2014?

A)780
B)850
C)625
D)687

Question 62

The following table provides demand and forecast information for a specialty store's products which are particularly popular around Halloween.

What is the seasonal index for the Spring season/quarter?

A)0.988
B)1.171
C)0.255
D)0.837

Question 63

The measure of forecasting error used in computing variance is known as ________.

Question 64

Economists want to forecast the demand for automobiles (cars,SUVs and light trucks)as a function of gas prices.Historical data has shown that this relationship can be approximated by a straight line.Which forecasting technique is best suited in this situation?

A)Weighted moving average
B)Exponential smoothing
C)Simple moving average
D)Linear regression

Question 65

Removing the seasonal component from a historical demand (de-seasonalizing)can be accomplished by dividing each data point by its appropriate seasonal index.

Question 66

Simple linear regression is used as a forecasting technique when there are multiple independent variables.

Question 67

Seasonal indices can be used to de-seasonalize demand or incorporate seasonality into a forecast.

Question 68

The measure of forecasting error that tells the average error in a forecast is known as ________.

Question 69

The tendency to forecast either too high or too low is known as ________.

Question 70

In overforecasting

A)the forecaster is too optimistic.
B)the forecaster is too pessimistic.
C)the thing being forecasted is performing better than expected.
D)None of the above

Question 71

In overforecasting,either the forecaster is too optimistic or,the thing being forecasted is performing better than expected.

Question 72

A measure of forecasting error that tracks the average percent of error is known as ________.

Question 73

If a pattern appears like cycles or seasonality when a dependent variable is plotted against time,one should use time series analysis instead of regression analysis.

Question 74

In the case of positive bias,people tend to

A)overforecast.
B)underforecast.
C)be exact.
D)be pessimictic.

Question 75

In the case of positive bias,people tend to ________.

Question 76

The Fresh Express Beverage Company is interested in evaluating the effects of advertising spend on the sales of their products.Based on historical data,they develop the following equation which approximates this relationship: y = 2.5 + 0.02x,where y is the number of bottles of beverages sold measured in millions of units,and x = amount of money spent on advertising measured in millions of dollars.Based on this information,which of the following statements is correct?

A)Every additional million dollars spent on advertising will increase the beverage sales by 200,000 units.
B)The Company will sell a minimum of 2.5 million units even if no money is spent on advertising.
C)Every additional 20,000 dollars spent on advertising will increase the beverage sales by a million units.
D)The number of units of beverage sold will decrease beyond a certain amount of money spent on advertising.

Question 77

In the case of positive bias,people tend to underforecast.

Question 78

The seasonal index for Menchie's Landscaping services for the summer season was 1.35.Based on this information,what can be concluded about the demand for the landscaping services for the summer season?

A)The demand for landscaping services for the summer season is 35% higher than the average demand per season.
B)The demand for landscaping services for the summer season is 35% higher than the average demand during the winter season.
C)The demand for landscaping services for the summer season is 35% lower than the average annual demand.
D)The forecast demand for landscaping services for the summer season will be accurate 35% of the time.

Question 79

At the end of June (and using the historical data up to and including the month of June),a manager develops the following equation to predict monthly sales: Y = 25,000 + 125x.What is the forecast for the month of September using this linear trend line equation?

A)25,250
B)25,375
C)25,500
D)26,000

Question 80

In overforecasting,the forecaster is too ________.