Deck 5: Demand Forecasting

Question 1

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

Answer 1

False

Question 2

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.

Answer 2

True

Question 3

One of the goals of an effective CPFR system is to minimize the negative impacts of the bullwhip effect on supply chains.

Answer 3

True

Question 4

Examples of forecasting accuracy measures are Mean Absolute Deviation,Mean Absolute Percentage Error,and Mean Square Error.

Question 5

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 6

Given the following information,the forecast for period two using exponential smoothing and $\alpha$ = 0.3 is 61.5.
$\begin{array}{ccc}\text { Period } & \text { Demand } & \text { Forecast } \\\hline 1 & 64 & 59 \\2 & 70 &\end{array}$

Question 7

Cause-and-Effect Models can have multiple independent variables.

Question 8

Some important steps involved in implementation of a CPFR process model include,seeking long-term holistic solutions,creating clear accountabilities,and reducing decision cycle time.

Question 9

Some of the benefits of CPFR include strengthening partner relationships,providing an analysis of sales and order forecasts,and allowing collaboration on future requirements and planning.

Question 10

Trends representing either increasing or decreasing movements over many years due to factors such as population growth,population shifts,cultural changes and income shifts are a component of a time series called "Random Variations".

Question 11

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.

Question 12

The difference between a simple regression forecast and a multiple regression forecast is that simple regression is used when there is only one explanatory (or independent)variable,while multiple regression is used when there are numerous explanatory variables.

Question 13

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 14

If you were calculating a forecast using an exponential smoothing model,a calculation using α = 0.2 would be putting a greater emphasis on recent data,while a calculation using α = 0.8 would be putting a greater emphasis on past data.Thus a lower α is more responsive to changes in demand in the most recent periods.

Question 15

The modern day business environment must deal with a more homogenous consumer base,which has caused the evolution of a more "push" oriented environment where suppliers must focus on manufacturing high volumes of standardized goods and convince consumers to buy their products.

Question 16

According to the text,the ultimate goal of any forecasting endeavor is to have an accurate and unbiased forecast.

Question 17

The goal of a good forecasting technique is to achieve 98.7% accuracy between the forecast and actual demand.

Question 18

In the Delphi forecasting method,a group of internal and external experts are surveyed during several rounds in terms of future events and long-term forecasts of demand but the group members do not physically meet.

Question 19

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

Question 20

Associative forecasting methods are based on opinions and intuition.

Question 21

The exponential smoothing forecast has the same value as the naïve forecast when α in the exponential smoothing model is equal to:

A)0
B)0.5
C)1
D)Insufficient information provided to determine answer

Question 22

Which of the following statements is FALSE:

A)Time Series forecasting is based on the assumption that the future is an extension of the past
B)Cause-and-Effect forecasting assumes that one or more factors are related to demand and, therefore, can be used to predict future demand
C)All quantitative methods become less accurate as the forecast's time horizon increases
D)It is generally not recommended to use a combination of both quantitative and qualitative methods

Question 23

Inaccurate forecasts can result in negative outcomes like:

A)Stockouts and poor responsiveness to market dynamics
B)High inventory costs of inventory and increased profits
C)Material shortages and decreased costs of obsolescence
D)Low inventory costs of inventory and stockouts

Question 24

Given the following information,calculate the forecast (accurate to 2 decimals)for period three using exponential smoothing and ? = 0.3. $\begin{array}{lll}\text { Period } & \text { Demand } & \text { Forecast } \\\hline 1 & 64 & 59 \\2 & 70 &\end{array}$

A)36.90
B)57.50
C)61.50
D)63.35

Question 25

$\begin{array}{lll}\text { Month } & \text { Actual } & \text { Forecast } \\\hline 1 & 10 & 11 \\2 & 8 & 10 \\3 & 9 & 8 \\4 & 6 & 6 \\5 & 7 & 8\end{array}$

-A forecasting method has produced the following data over the past 5 months shown in Data Set E2.What is the mean absolute deviation (accurate to 2 decimals)?

A)?0.60
B)?1.20
C)1.00
D)1.25

Question 26

$\begin{array}{ll}\text { Period } & \text { Sales Volume } \\\hline 1 & 10000 \\2 & 12400 \\3 & 14250 \\4 & 15750 \\5 & 20500 \\6 & 18500 \\7 & 15750 \\8 & 20500 \\9 & 21500 \\10 & 22550\end{array}$

-Using Data Set E1,what would be the forecast for period 6 using a five period weighted moving average? The weights for each period are 0.05,0.10,0.20,0.30,and 0.35 from the oldest period to the most recent period,respectively.(Choose the closest answer.)

A)16490
B)17825
C)14575
D)16275

Question 27

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)Naïve method

Question 28

If a tracking signal is positive,which one of the following is true?

A)Actual value is higher than forecast
B)Actual value is less than forecast
C)Actual value is equal to forecast
D)Unable to draw any conclusion

Question 29

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 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

The equation for a simple linear regression that saw sales averaging $225,000 over the last ten periods,and advertising budgets averaging $3,000 over the last 10 periods is:Y = 3250 + 120xThis indicates that a $1 increase in advertising will increase sales by:

A)$3370
B)$250
C)$120
D)$1875

Question 32

Which of the following indices provided by the Institute for Supply Management (ISM)is considered the most important by economists because it is a composite of five weighted,seasonally adjusted indices?

A)Purchasing Managers Index
B)Export Orders Index
C)Production and Inventory Index
D)New Orders Index

Question 33

According to the textbook,which of the following is NOT a way to closely match supply and demand?

A)Holding high amounts of inventory
B)Maintaining a rigid pricing system
C)Utilizing overtime
D)Hiring temporary workers

Question 34

Using the actual demand shown in the table below,what is the forecast for May (accurate to 1 decimal)using a 4-month weighted moving average and the weights 0.1,0.2,0.3,0.4 (with the heaviest weight applied to the most recent period)? $\begin{array}{llllll}\text { Nov. } & \text { Dec. } & \text { Jan. } & \text { Feb. } & \text { Mar. } & \text { Apr. } \\\hline 39 & 36 & 40 & 38 & 48 & 46\end{array}$

A)44.4
B)43.0
C)42.5
D)41.6

Question 35

$\begin{array}{ll}\text { Period } & \text { Sales Volume } \\\hline 1 & 10000 \\2 & 12400 \\3 & 14250 \\4 & 15750 \\5 & 20500 \\6 & 18500 \\7 & 15750 \\8 & 20500 \\9 & 21500 \\10 & 22550\end{array}$

-Using Data Set E1,what would be the forecast for period 7 using a four period moving average: (Choose the closest answer.)

A)17625
B)15225
C)15300
D)17250

Question 36

$\begin{array}{ll}\text { Period } & \text { Sales Volume } \\\hline 1 & 10000 \\2 & 12400 \\3 & 14250 \\4 & 15750 \\5 & 20500 \\6 & 18500 \\7 & 15750 \\8 & 20500 \\9 & 21500 \\10 & 22550\end{array}$

-Using Data Set E1,what would be the forecast for period 6 using the exponential smoothing method? Assume the forecast for period 5 is 14000.Use a smoothing constant of ? = 0.4 (Choose the closest answer.)

A)14575
B)26100
C)16600
D)19700

Question 37

Some measures of forecasting accuracy include mean absolute deviation,mean absolute percentage error,and mean squared error.The formula for each is dependent on the forecast error,which is calculated by using the equation:

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

Question 38

The following are all common qualitative forecasting models EXCEPT:

A)Jury of Executive Opinion
B)Trend Variation
C)Delphi Method
D)Sales Force Composite

Question 39

One common Cause-and-Effect Model used is:

A)Regression analysis
B)Linear Trend Forecast
C)Moving Average Forecast
D)Mean Absolute Deviation

Question 40

Your company is conducting forecasting that revolves around the current recession and expansion of the U.S.economy.This type of forecasting can be referred to as what component of a time series?

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

Question 41

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 42

Explain the key challenges of CPFR implementation.

Question 43

Which of the following is NOT a benefit of CPFR?

A)Improved corporate image among regulators
B)Integrates planning, forecasting and logistics activities
C)Provides analysis of sales and order forecasts
D)Provide an analysis of key performance metrics

Question 44

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 45

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

Question 46

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

Question 47

Qualitative methods of forecasting include which of the following:

A)Sales Force Composite
B)Customer Surveys
C)Jury of Executive Opinion
D)All of these

Question 48

According to 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 49

Use the data set below (Data Set E3)to answer the questions that follow.Data Set E3 ​
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, 0.15, 0.30, and 0.50 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 E3)?
d.Will that type of forecast always be more accurate? Why or why not?

Question 50

List and describe two types of qualitative forecasting methods.

Question 51

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

Question 52

$\begin{array}{lll}\text { Month } & \text { Actual } & \text { Forecast } \\\hline 1 & 10 & 11 \\2 & 8 & 10 \\3 & 9 & 8 \\4 & 6 & 6 \\5 & 7 & 8\end{array}$

-Based on the information in Data Set E2,what is the mean squared error (accurate to 2 decimals)?

A)7.00
B)1.40
C)1.00
D)0.80