Deck 3: Demand Forecasting

Question 1

Forecasts are rarely perfect.

Answer 1

True

Question 2

Forecasting techniques that are based on time series data assume that future values of the series will duplicate past values.

Answer 2

False

Question 3

The naive approach to forecasting requires a linear trend line.

Answer 3

False

Question 4

A consumer survey is an easy and sure way to obtain direct input from existing customers.

Question 5

Increasing the number of data points included in a moving average will result in a forecast that is smoother but less responsive to changes.

Question 6

Forecast accuracy tends to increase as the time horizon increases.

Question 7

Forecasts for groups of items tend to be less accurate than forecasts for individual items because forecasts for individual items are not subject to as many influencing factors.

Question 8

Time series techniques involve identification of explanatory variables that can be used to predict future demand.

Question 9

Forecasts based on time series (historical)data are referred to as associative forecasts.

Question 10

The naive forecast can serve as a standard of comparison against which to judge the cost and accuracy of other techniques.

Question 11

Organizations that are capable of responding quickly to changing requirements can use a shorter forecast horizon and therefore benefit from more accurate forecasts.

Question 12

The naive forecast is limited in its application to series that reflect no trend or seasonality.

Question 13

As a forecasting technique,the Delphi technique is useful for technological forecasting.

Question 14

Since a primary goal of operations management to match supply to demand,forecasts become a basic input to the decision process because they provide information on past demand.

Question 15

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

Question 16

Forecasting techniques generally assume that the same causal system that existed in the past will continue to exist in the future.

Question 17

One weakness of the Delphi method is that there is a high risk that one person's opinion will prevail.

Question 18

The primary difference between irregular and random variations is the ability to attribute variations to a specific cause.

Question 19

The purpose of the forecast should be established first so that the level of detail,amount of resources,and accuracy level can be indicated.

Question 20

Generally the responsibility for preparing demand forecasts for finished goods or services lies with operations rather than marketing or sales departments.

Question 21

The T in the model TAF = S + T represents the time dimension.

Question 22

Correlation measures the strength and direction of a relationship between variables.

Question 23

Trend adjusted exponential smoothing requires selection of two smoothing constants.

Question 24

In order to compute seasonal relatives,the trend of past data must be computed or known.

Question 25

A smoothing constant of .1 will cause an exponential smoothing forecast to react more quickly to a sudden change than a value of .3 will.

Question 26

Exponential smoothing is a form of weighted averaging.

Question 27

In exponential smoothing,an alpha of .30 will cause a forecast to react more quickly to a large error than will an alpha of .20.

Question 28

The MSE is the best measure to use in a control chart to monitor if forecast error is randomly distributed around a mean value of 0.

Question 29

A simple moving average assigns equal weight to each data point that is represented by the average.

Question 30

Removing the seasonal component from a data series (deseasonalizing)can be accomplished by dividing each data point by its appropriate seasonal relative.

Question 31

An advantage of "trend adjusted exponential smoothing" over the "linear trend equation" is its ability to adjust over time to changes in the trend.

Question 32

A moving average forecast tends to be more responsive to changes in the data series when more data points are included in the average.

Question 33

Centred moving averages (CMA)is a better way to compute seasonal relatives than using a simple moving average if there is a linear trend in a time series.

Question 34

Positive forecast errors,the case when the forecast is low relative to the actual value,are preferable to negative forecast errors,the case when the forecast is higher than the actual value

Question 35

MAD is equal to the square root of MSE.

Question 36

A seasonal relative (or seasonal indexes)is expressed as a percentage of the average or trend in a time series.

Question 37

An advantage of a weighted moving average is that more recent experience is given more weight than less recent experience.

Question 38

The forecast error is the difference between the actual value and the forecast value for a given period.

Question 39

Multiple regression procedures permit us to extend associative models to relationships that involve more than one predictor variable.

Question 40

In order to update a moving average forecast,the values of each data point in the average must be known.

Question 41

Moving average and exponential smoothing forecasting techniques are used for long range forecasts.

Question 42

A proactive approach to forecasting views forecasts as probable descriptions of future demand,assuming actions can be taken to meet that demand.

Question 43

The square root of MSE is used to estimate the sample standard deviation of forecast errors.

Question 44

The two general approaches to forecasting are:

A) mathematical and statistical.
B) qualitative and quantitative.
C) judgmental and quantitative.
D) historical and associative.
E) judgmental and associative.

Question 45

When error values fall outside the limits of a control chart,this signals a need for corrective action

Question 46

When all the forecast errors plotted on a control chart are either all positive,or all negative,this shows that the forecasting technique is performing adequately.

Question 47

Using control charts to monitor forecast error are best suited for forecasting applications involving a single forecast rather than applications involving a series of forecasts (e.g.monthly sales).

Question 48

In operations,forecasts are the basis for all of the following EXCEPT:

A) capacity planning
B) project management
C) inventory planning
D) work assignments and workloads
E) forecasts are the basis for all of the choices.

Question 49

Forecasts can help a manager to do all of the following EXCEPT:

A) reduce uncertainty in planning.
B) design the system.
C) plan the medium-term use of the system.
D) schedule the short-term use of the system.
E) predict the future precisely.

Question 50

A random pattern of errors within the limits of a control chart signals a need for corrective action.

Question 51

A proactive approach to forecasts might involve advertising or other attempts to influence the demand level.

Question 52

All of the following are true about forecasts EXCEPT:

A) become less accurate with longer time horizons.
B) are less accurate for individual items than for groups of items.
C) are always perfect.
D) are usually the responsibility of operating managers to prepare.
E) assume the same underlying causal system in the future as the past.

Question 53

Which of the following is not necessarily an element of a good forecast?

A) The degree of accuracy is stated.
B) Time horizon long enough so forecast results can be used.
C) Expressed in meaningful units.
D) Low cost to complete.
E) Technique is simple to understand and use.

Question 54

Which would not generally be considered a feature common to all forecasts?

A) An assumption of a stable underlying causal system.
B) Actual results will differ somewhat from predicted values.
C) Historical data is available on which to base the forecast.
D) Forecasts for groups of items tend to be more accurate than forecasts for individual items.
E) Accuracy decreases as the time horizon increases.

Question 55

Determining the purpose of the forecast is an important first step in the forecasting process because it dictates:
I)the level of detail required in the forecast
II)the amount of resources that can be justified
III)the level of accuracy required

A) I and II only
B) I and III only
C) II and III only
D) I, II, and III only
E) none of the choices are true

Question 56

The best forecast is always the one that is the most accurate.

Question 57

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

A) Determine the purpose of the purpose.
B) Eliminate any assumptions and rely solely on verifiable factual data.
C) Establish a forecasting horizon.
D) Select a forecasting technique.
E) Monitor the forecast.

Question 58

A control chart involves setting control limits to monitor cumulative forecast error.

Question 59

Which of the following is not a requirement of a properly prepared forecast?

A) Timely
B) Accurate
C) Reliable
D) Simple to understand and use
E) Inexpensive

Question 60

The use of a control chart assumes that errors are normally distributed about a mean of zero.

Question 61

Which phrase most closely describes the Delphi technique?

A) Associative forecast
B) Consumer survey
C) Series of questionnaires
D) Double smoothing
E) Historical data

Question 62

Persistent upward or downward movement in time series data is called:

A) seasonal variation.
B) cycles.
C) irregular variation.
D) trend.
E) random variation.

Question 63

Which of the following is not a type of judgmental forecasting?

A) Executive opinions
B) Sales force opinions
C) Consumer surveys
D) Expert opinions
E) Time series analysis

Question 64

Given the following historical data,what is the simple three-period moving average forecast for period 6?

A) 67
B) 115
C) 69
D) 68
E) 68.67

Question 65

Which of the following would be an advantage of using opinions of a sales force to develop a demand forecast?

A) The sales staff is least affected by changing customer needs.
B) The sales force can easily distinguish between customer desires and probable actions.
C) The sales staff is often aware of customers' future plans.
D) Salespeople are least likely to be influenced by recent events.
E) Salespeople are least likely to be biased by sales quotas.

Question 66

A network security company is securing input from information technology managers trying to anticipate when Wi Fi networks might be available in at least half of their client's businesses.Which method are they most likely to use?

A) The Delphi method
B) Consumer surveys
C) Regression models
D) Naive method
E) Trend models

Question 67

In order to increase the responsiveness of a forecast made using the moving average technique,the number of data points in the average should be:

A) decreased.
B) increased.
C) multiplied by a larger alpha.
D) multiplied by a smaller alpha.
E) none of the choices are true.

Question 68

Time series data may exhibit all but which of the following behaviours?

A) Trend
B) Seasonality
C) Cycles
D) Irregularities
E) All of the choices may be exhibited

Question 69

Naive forecasting methods:

A) are quick and easy to prepare.
B) are easy for users to understand.
C) can serve as an accuracy standard for other techniques.
D) All of the choices are true.
E) None of the choices are true.

Question 70

Moving average forecasting techniques:

A) immediately reflect changing patterns in the time series.
B) lead changes in the time series.
C) smooth variations in the time series.
D) all of the choices are true.
E) none of the choices are true.

Question 71

The forecasting method which uses anonymous questionnaires to achieve a consensus forecast is:

A) sales force opinions.
B) consumer surveys.
C) the Delphi method.
D) time series analysis.
E) executive opinions.

Question 72

Averaging forecasting techniques are useful for:
I)distinguishing between random and non-random variations
II)smoothing out fluctuations in data
III)forecasting cyclical time series

A) I only
B) I and II only
C) II only
D) II and III only
E) I, II, and III

Question 73

The primary difference between seasonality and cycles is:

A) the duration of the repeating patterns.
B) the magnitude of the variation.
C) the ability to attribute the pattern to a cause.
D) all of the choices are differences.
E) none of the choices are differences.

Question 74

One reason for using the Delphi method in forecasting is:

A) responses are anonymous.
B) to achieve a high degree of accuracy.
C) to maintain accountability and responsibility.
D) to be able to replicate results.
E) all of the choices are reasons.

Question 75

For the data given below,if the time series was assumed to be stable,what would the naive forecast be for the next period?

A) 58
B) 62
C) 59.5
D) 61
E) none of the choices are true

Question 76

Disadvantages of naive forecasts include:
I)time-consuming to prepare
II)the techniques are complex therefore difficult to understand
III)do not smooth random variations

A) I, II, and III
B) I and II
C) I and III
D) II and III
E) none of the choices are disadvantages.

Question 77

Using the latest observation in a sequence of data to forecast the next period is:

A) a moving average forecast.
B) a naive forecast.
C) an exponentially smoothed forecast.
D) an associative forecast.
E) none of the choices are true.

Question 78

Given the following historical data and weights of .5 for the most recent period,.3 for the next most recent,and .2 for the next after that,what is the weighted three-period moving average forecast for period 5?

A) 144.20
B) 144.80
C) 144.67
D) 143.00
E) 144.00

Question 79

Which of the following steps is considered the last step in the forecasting process?

A) Gather and analyze relevant historical data.
B) Determine the purpose of the forecast.
C) Monitor the forecast.
D) Prepare the forecast.
E) Establish a time horizon.

Question 80

Which is not a characteristic of simple moving averages applied to time series data?

A) Smooths random variations in the data
B) Weights each historical value equally
C) Lags changes in the data
D) Has minimal reliance on historical data
E) Smooths real variations in the data