Deck 15: Demand Management and Forecasting

Question 1

Continual review and updating in light of new data is a forecasting technique called second-guessing.

Answer 1

False

Question 2

People with no or modest analytical backgrounds can make good use of causal regression forecasting models.

Answer 2

False

Question 3

There is not much that a firm can to influence independent demand.

Answer 3

False

Question 4

In the weighted moving average forecasting model the weights must add up to one times the number of data points.

Question 5

Experience and trial and error are the simplest ways to choose weights for the weighted moving average forecasting model.

Question 6

In exponential smoothing,it is desirable to use a higher smoothing constant when forecasting demand for a product experiencing high growth.

Question 7

In a forecasting model using simple exponential smoothing the data pattern should remain stationary.

Question 8

Exponential smoothing is always the most accurate of all forecasting models.

Question 9

A central premise of exponential smoothing is that more recent data is less indicative of the future than data from the distant past.

Question 10

Trend lines are usually the last things considered when developing a forecast.

Question 11

The equation for exponential smoothing states that the new forecast is equal to the old forecast plus the error of the old forecast.

Question 12

In a forecasting model using simple moving average the shorter the time span used for calculating the moving average,the closer the average follows volatile trends.

Question 13

In the simple exponential smoothing forecasting model you need at least 100 observations to set the weight.

Question 14

Independent demand is the demand for a product or service caused by the demand for other products or services.

Question 15

Cyclical influences on demand are often expressed graphically as a linear function that is either upward or downward sloping.

Question 16

Time series forecasting models make predictions about the future based on analysis of past data.

Question 17

Box-Jenkins forecasting models deliver very precise forecasts and are most useful to people with unsophisticated analytical backgrounds.

Question 18

Cyclical influences on demand may come from occurrences such as political elections,war or economic conditions.

Question 19

Focus forecasting is the most accurate of all forecasting models.

Question 20

The weighted moving average forecasting model uses a weighting scheme to modify the effects of individual data points.This is its major advantage over the simple moving average model.

Question 21

Regression is a functional relationship between two or more correlated variables,where one variable is used to predict another.

Question 22

The value of the smoothing constant alpha in an exponential smoothing model is between 0 and 1.

Question 23

The simple moving average model permits non-linear forecast values.

Question 24

Exponential smoothing forecasts always lag behind the actual occurrence but can be corrected somewhat with a trend adjustment.

Question 25

Linear regression is not useful for aggregate planning.

Question 26

Simple exponential smoothing lags changes in demand.

Question 27

When forecast errors occur in a normally distributed pattern,the ratio of the mean absolute deviation to the standard deviation is 2 to 1 or 2 x MAD = 1 standard deviation.

Question 28

Additive seasonal variation in time series data means a forecast can only be found by multiplying the trend times the seasonal factor (or index).

Question 29

Multiple regression analysis uses several regression models to generate a forecast.

Question 30

MAD statistics can be used to generate tracking signals.

Question 31

RSFE in forecasting stands for "readable safety function for error detection".

Question 32

Because the factors governing demand for products are very complex,all forecasts of demand contain some error.

Question 33

Random errors can be defined as those that cannot be explained by the forecast model being used.

Question 34

The standard error of the estimate of a linear regression is not useful for judging the fit between the data and the regression line when doing forecasts.

Question 35

The weighted moving average model does not work with non-linear forecast values.

Question 36

A major limitation of linear regression as a model for forecasting is that past data and future projections are assumed to fall on or near a straight line.

Question 37

The simple moving average model requires linear forecast values.

Question 38

The exponential smoothing model permits non-linear forecast values.

Question 39

Random errors in forecasting occur when an undetected secular trend is not included in a forecasting model.

Question 40

A tracking signal (TS)can be calculated using the arithmetic sum of forecast deviations divided by the MAD.

Question 41

For every forecasting problem there is one best forecasting technique.

Question 42

Which of the following forecasting methods uses executive judgment as its primary component for forecasting?

A)Historical analogy
B)Time series analysis
C)Panel consensus
D)Grass roots
E)Focus forecasting

Question 43

Which of the following forecasting methodologies is considered a time series forecasting technique?

A)Box Jenkins technique
B)Econometrics
C)Leading indicators
D)Historical analogy
E)Simulation

Question 44

Which of the following forecasting methods is very dependent on selection of the right individuals who will judgmentally be used to actually generate the forecast?

A)Time series analysis
B)Simple moving average
C)Weighted moving average
D)Delphi method
E)Panel consensus

Question 45

In business forecasting,what is usually considered a medium-term time period?

A)Six weeks to one year
B)Three months to two years
C)One to five years
D)One to six months
E)Six months to six years

Question 46

Which of the following is not one of the basic types of forecasting?

A)Qualitative
B)Time series analysis
C)Causal relationships
D)Simulation
E)Force field analysis

Question 47

Which of the following forecasting methodologies is considered a time series forecasting technique?

A)Input/output models
B)Exponential averaging
C)Simple movement smoothing
D)Weighted moving average
E)Simulation

Question 48

In most cases,demand for products or services can be broken into several components.Which of the following is considered a component of demand?

A)Cyclical elements
B)Future demand
C)Past demand
D)Inconsistent demand
E)Level demand

Question 49

In general,which forecasting time frame compensates most effectively for random variation and short term changes?

A)Short-term forecasts
B)Quick-time forecasts
C)Long range forecasts
D)Medium term forecasts
E)Rapid change forecasts

Question 50

"Dynamic models,usually computer-based,that allow the forecaster to make assumptions about the internal variables and external environment in the model" is a definition for which of the following forecasting methodologies?

A)Causal
B)Simulation
C)Focus forecasting
D)Shiskin Time series
E)Market research

Question 51

Which of the following forecasting methodologies is considered a causal forecasting technique?

A)Box Jenkins Technique
B)Weighted moving average
C)Leading indicators
D)Historical analogy
E)Focus forecasting

Question 52

Focus forecasting is an approach to forecasting that tries several rules that seem logical and easy to understand to project past data into the future.

Question 53

A good forecaster is one who develops special skills and experience at one forecasting technique and is capable of applying it to widely diverse situations.

Question 54

In business forecasting,what is usually considered a short-term time period?

A)Four weeks or less
B)More than three months
C)Six months or more
D)Less than three months
E)One year

Question 55

In most cases,demand for products or services can be broken into several components.Which of the following is not considered a component of demand?

A)Average demand for a period
B)A trend
C)Seasonal elements
D)Past demand
E)Autocorrelation

Question 56

Which of the following forecasting methodologies is considered a causal forecasting technique?

A)Market research
B)Historical analogy
C)Delphi Method
D)Input/output models
E)Simulation

Question 57

Which of the following forecasting methodologies is considered a qualitative forecasting technique?

A)Simple moving average
B)Market research
C)Linear regression
D)Focus forecasting
E)Multiple regression

Question 58

In business forecasting,what is usually considered a long-term time period?

A)Three months or longer
B)Six months or longer
C)One year or longer
D)Two years or longer
E)Ten years or longer

Question 59

Which of the following forecasting methodologies is considered a qualitative forecasting technique?

A)Grass roots
B)Econometric models
C)Regression analysis
D)Exponential smoothing
E)Simple moving average

Question 60

In most cases,demand for products or services can be broken into several components.Which of the following is considered a component of demand?

A)Forecast error
B)Autocorrelation
C)Previous demand
D)Consistent demand
E)Repeat demand

Question 61

As a consultant you have been asked to generate a unit demand forecast for a product for year 2009 using exponential smoothing.The actual demand in year 2008 was 750.The forecast demand in year 2008 was 960.Using this data and a smoothing constant alpha of 0.3,which of the following is the resulting year 2009 forecast value?

A)766
B)813
C)897
D)1,023
E)1,120

Question 62

A company has actual unit demand for three consecutive years of 124,126 and 135.The respective forecasts for the same three years are 120,120 and 130.Which of the following is the resulting MAD value that can be computed from this data?

A)1
B)3
C)5
D)15
E)123

Question 63

In general,which forecasting time frame is best to detect general trends?

A)Short-term forecasts
B)Quick-time forecasts
C)Long range forecasts
D)Medium term forecasts
E)Rapid change forecasts

Question 64

A company wants to forecast demand using the weighted moving average.If the company uses three prior yearly sales values and we want to weight year 2006 at 30%,year 2007 at 30% and year 2008 at 40%,which of the following is the weighted moving average forecast for year 2009?

A)170
B)168
C)158
D)152
E)146

Question 65

Which of the following considerations is not usually a factor in deciding which forecasting model a firm should choose?

A)Time horizon to forecast
B)Product
C)Accuracy required
D)Data availability
E)Analyst sophistication

Question 66

Which of the following is a possible source of bias error in forecasting?

A)Failing to include the right variables
B)Using the wrong forecasting method
C)Employing less sophisticated analysts than necessary
D)Using incorrect data
E)Using standard deviation rather than MAD

Question 67

Which of the following forecasting methods can be used for short-term forecasting?

A)Simple exponential smoothing
B)Delphi technique
C)Market research
D)Hoskins-Hamilton smoothing
E)Serial regression

Question 68

Given a prior forecast demand value of 1,100,a related actual demand value of 1,000 and a smoothing constant alpha of 0.3,what is the exponential smoothing forecast value?

A)1,000
B)1,030
C)1,070
D)1,130
E)970

Question 69

The exponential smoothing method requires which of the following data to forecast the future?

A)The most recent forecast,the most recent demand and the smoothing constant
B)Precise actual demand for the past 10-15 years
C)The slope of the trendline and the seasonality peak-to-trough ratio
D)Overall industry demand data
E)Tracking values alpha,beta and gamma

Question 70

A company wants to generate a forecast for unit demand for year 2009 using exponential smoothing.The actual demand in year 2008 was 120.The forecast demand in year 2008 was 110.Using this data and a smoothing constant alpha of 0.1,which of the following is the resulting year 2009 forecast value?

A)100
B)110
C)111
D)114
E)120

Question 71

Which of the following is the major reason that exponential smoothing has become well accepted as a forecasting technique?

A)Accuracy
B)Sophistication of analysis
C)Predicts turning points
D)Ease of use
E)Forecasts lag data trends

Question 72

A company has actual unit demand for four consecutive years of 100,105,135 and 150.The respective forecasts were 120 for all four years.Which of the following is the resulting MAD value that can be computed from this data?

A)2.5
B)10
C)20
D)22.5
E)30

Question 73

Given a prior forecast demand value of 230,a related actual demand value of 250 and a smoothing constant alpha of 0.1,what is the exponential smoothing forecast value for the following period?

A)230
B)232
C)238
D)248
E)250

Question 74

A company wants to forecast demand using the simple moving average.If the company uses three prior yearly sales values ,which of the following is the simple moving average forecast for year 2009?

A)100.5
B)122.5
C)133.3
D)135.6
E)139.3

Question 75

If a firm produced a product that is experiencing growth in demand,the smoothing constant alpha used in an exponential smoothing forecasting model would tend to be which of the following?

A)Close to zero
B)A very low percentage,less than 10%
C)The more rapid the growth,the higher the percentage
D)The more rapid the growth,the lower the percentage
E)50% or more

Question 76

Which of the following are used to describe the degree of error?

A)Weighted moving average
B)Regression
C)Moving average
D)Focus forecast
E)Mean absolute deviation

Question 77

A company wants to forecast demand using the simple moving average.If the company uses four prior yearly sales values ,which of the following is the simple moving average forecast for year 2009?

A)100.5
B)140.0
C)142.5
D)145.5
E)155.0

Question 78

A company wants to forecast demand using the weighted moving average.If the company uses two prior yearly sales values and we want to weight year 2007 at 10% and year 2008 at 90%,which of the following is the weighted moving average forecast for year 2009?

A)120
B)128
C)133
D)138
E)142

Question 79

In general,which forecasting time frame best identifies seasonal effects?

A)Short-term forecasts
B)Quick-time forecasts
C)Long range forecasts
D)Medium term forecasts
E)Rapid change forecasts

Question 80

If a firm produced a standard item with relatively stable demand,the smoothing constant alpha used in an exponential smoothing forecasting model would tend to be in which of the following ranges?

A)5% to 10%
B)20% to 50%
C)20% to 80%
D)60% to 120%
E)90% to 100%