Deck 5: Demand Forecasting

Question 1

Minimizing the negative impacts of the bullwhip effect on supply chains is one of the goals of an effective CPFR system.

Answer 1

True

Question 2

The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information.

Answer 2

False

Question 3

The Naïve forecast, Mean Profit Leverage, and Mean Square Error are examples of forecasting accuracy measures.

Answer 3

False

Question 4

As tighter control limits are instituted for the tracking signal, there is a greater probability of finding exceptions that require no action, but it also means catching changes in demand earlier.

Question 5

Random variations represent either increasing or decreasing movements over many years due to factors such as population growth, population shifts, cultural changes and income shifts.

Question 6

Individual biases could negatively impact the effectiveness of the Sales Force Composite forecasting approach, due to the proximity of the sales personnel to the consumers.

Question 7

One of the benefits of CPFR include integration of planning, forecasting, and logistics activities.

Question 8

Cyclical variations are longer than a year and are influenced by macroeconomic and political factors.

Question 9

Regression analysis is commonly used in the cause-and-effect forecasting model.

Question 10

Toymaker Spin Master, did not properly forecast demands for their new product, Hatchimals, in 2016.This caused stockouts for their distributors.

Question 11

It is possible to expect 100 percent forecast accuracy most of the time.

Question 12

The goal of a good forecasting technique is to minimize the deviation between actual demand and the forecast.

Question 13

Trend variations are wavelike movements that are shorter than a year.

Question 14

Without supply chain trading partners collaborating and exchanging information, the supply chain will always be suboptimal and contain excess inventories, resulting in less-than-maximum supply chain profits.

Question 15

Given the following information, the forecast for period two using exponential smoothing an = 0.3 is 60.5.

Question 16

Forecast error is the actual quantity minus the forecast.

Question 17

The calculated forecast for May is 46, using the actual demand shown in the table below, and a 3-month weighted moving average with weights 0.1, 0.4, 0.5 (the heaviest weight applied to the most recent period).

Question 18

The Delphi forecasting approach is applicable for high-risk technology forecasting; large, expensive projects; or major new product introductions

Question 19

If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average.

Question 20

Quantitative forecasting methods are based on opinions and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts.

Question 21

Which one of the following is NOT a type of qualitative forecasting?

A) Sales force composite
B) Consumer survey
C) Jury of executive opinion
D) Simple moving average

Question 22

Given the following information, calculate the forecast (round to nearest whole number) for period three using exponential smoothing and = 0.4.

A) 60
B) 65
C) 68
D) 71

Question 23

Using the data set below, what would be the forecast for period 4 using a three period moving average: (Choose the closest answer.)

A) 11500
B) 11883
C) 12244
D) 14008

Question 24

Using the actual demand shown in the table below, what is the forecast for May (accurate to 1 decimal) using a 3-month weighted moving average and the weights 0.20, 0.35, 0.45 (with the heaviest weight applied to the most recent period.Round to nearest whole number)?

A) 51
B) 56
C) 62
D) 68

Question 25

Random variations in a Time Series component are due to:

A) Population growth
B) Unpredictable events
C) Using a large value for the exponential smoothing constant
D) Inaccurate responses of the expert participants

Question 26

When there is not a lot of currently relevant data available it is generally best to use:

A) Qualitative forecasting
B) Time series forecasting
C) Naive forecasting
D) Simple moving average forecasting

Question 27

What component of a time series has variations in demand which show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, months, or years?

A) Trend Variations
B) Cyclical Variations
C) Random Variations
D) Seasonal Variations

Question 28

Quantitative forecasts use mathematical techniques that are based on:

A) Expert opinions
B) Surveys
C) Historical data
D) Sales force knowledge of the market

Question 29

Your company is conducting forecasting that revolves around population growth in large cities.This type of forecasting can be referred to as what component of a time series?

A) Cyclical Variations
B) Trend Variations
C) Seasonal Variations
D) Random Variations

Question 30

The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the:

A) Bullwhip effect
B) Delphi method
C) CPFR effect
D) Mean deviation

Question 31

Using the data set below, what would be the forecast for period 5 using a four period weighted moving average? The weights for each period are 0.05, 0.15, 0.30, and 0.50 from the oldest period to the most recent period, respectively.(Choose the closest answer.)

A) 12820
B) 13105
C) 13710
D) 14610

Question 32

Using the data set below, what would be the forecast for period 5 using the exponential smoothing method? Assume the forecast for period 4 is 14000.Use a smoothing constant =0.4 (Choose the closest answer.)

A) 12660
B) 13190
C) 14030
D) 15220

Question 33

When linear trend forecasts are developed, demand would typically be:

A) The independent variable
B) The dependent variable
C) The lead variable
D) The passive variable

Question 34

Cyclical variations are longer than a year and can be influenced by:

A) Events such as natural disasters
B) Imbalances in supply and demand
C) Political factors
D) Population growth

Question 35

All of the following may influence demand and should be considered when developing a forecast EXCEPT

A) New competition
B) Supplier quality
C) Ergonomic conditions
D) Emerging markets

Question 36

In 2016, Spin Master, did not properly forecast demand for their new product, Hatchimals, causing ___________ for their distributors.

A) Excess stock
B) The bullwhip effect
C) Stockouts
D) Price reductions

Question 37

CPFR is more likely to succeed if companies educate their employees on the benefits of the process changes and the disadvantages of maintaining the status quo.

Question 38

Inaccurate forecasts can result in negative outcomes like:

A) High inventory costs and increased profits
B) Imbalances in supply and demand
C) Material shortages and decreased costs of obsolescence
D) Low inventory costs and stockouts

Question 39

The smoothing constant for exponential smoothing must be?

A) Positive
B) Negative
C) Between 0 and 1
D) Greater than 1

Question 40

The following time-series approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time:

A) Naïve Forecast
B) Weighted Moving Average
C) Simple Moving Average
D) Exponential Smoothing

Question 41

What is a tracking signal? How can managers use the information provided by the tracking signal to improve the quality of forecasts?

Question 42

What is considered an acceptable range for a tracking signal?

A) ±1
B) ±2
C) ±3
D) ±10

Question 43

Use the data set below to answer the questions that follow.

a.Find the four-period simple moving average forecasts for Periods 5 and 6.
b.Find the four-period weighted moving average forecasts for Periods 5 and 6 using weights of 0.05, 0.25, 0.30, and 0.40 from the earliest period to the latest period, respectively.
c.Which set of forecasts is more accurate, the simple moving average forecasts or the weighted moving average forecasts? Why is that set of forecasts more accurate in this particular case (using Data Set E4)?
d.Will that type of forecast always be more accurate? Why or why not?

Question 44

According to the textbook, the top three challenges for CPFR implementation include all of the following EXCEPT:

A) Making organizational and procedural changes
B) Trust between supply chain partners
C) Cost
D) Supplier lead times

Question 45

Explain the key challenges of CPFR implementation.

Question 46

The real value of Collaborative Planning, Forecasting and Replenishment (CPFR) comes from:

A) Sophisticated forecasting algorithms
B) Exchange of forecasting information
C) Both A and B
D) None of the above

Question 47

Which of the following is a benefit of CPFR?

A) Provides an analysis of key performance metrics
B) Integrates planning, forecasting and logistics activities
C) Uses joint planning and promotions management
D) All of the above

Question 48

A positive error implies that a forecast was?

A) Too low
B) Too high
C) Neither too high or too low
D) The sign of an error gives no information as to the direction of the error

Question 49

Which of the following is a major cultural issue and big hurdle for widespread implementation of CPFR?

A) There is no software available to use
B) Global economic changes
C) Trust
D) All of the above

Question 50

Given the following information, calculate the forecast (round to nearest whole number) for period four using exponential smoothing and =0.3.
Use a tracking signal to determine if there is a bias problem with the forecasting method.(Assume the control limit for the tracking signal is ± 3.

Question 51

Answer the following questions regarding quantitative and qualitative forecasting:
a.Define quantitative forecasting.
b.Explain the naïve forecasting method and give an example.
c.What are the benefits of using the naïve forecasting method?
d.Under which circumstances would one utilize a combination of both quantitative and qualitative forecasting?

Question 52

What does the acronym CPFR represent?

A) Coordinated planning and forecasting relationships
B) Collaborative planning, forecasting, and replenishment
C) Centralized purchasing and forecasting relationships
D) Collaborative purchasing, forecasting, and receivables

Question 53

List FOUR benefits that can be achieved by implementing a successful CPFR program.

Question 54

A forecast tracking signal is used to determine:

A) If the product has shipped on time
B) The location of the current shipment
C) The price to charge for the product
D) If the forecast bias is within the acceptable control limits

Question 55

Based on the information in the data set below, what is the mean squared error (accurate to 1 decimal)?

A) 8.0
B) 10.0
C) 1.00
D) 0.8

Question 56

The formula for the forecast error, is calculated by using the equation:

A) Actual demand for period t minus the forecasted demand for period t
B) Actual demand for period t divided by the forecasted demand for period t
C) Actual demand for period t plus the forecasted demand for period t
D) The average of Actual demand for period t and forecasted demand for period t

Question 57

List and Explain two types of qualitative forecasting methods.

Question 58

A forecasting method has produced the following data over the past 5 months shown in the data set.What is the mean absolute deviation (accurate to 1 decimals)?

A) 10.0
B) -1.2
C) 2.0
D) 2.4

Question 59

The four components of time series data are: trend variations, cyclical variations, seasonal variations, and random variations.Briefly describe each type of variation.