Deck 11: Forecasting

Question 1

Which of the following statements is/are true about time-series forecasting?

A)The basic strategy is to identify the magnitude and form of each component based on available past data.
B)It is used to make detailed analyses of past demand patterns over time and to project these patterns forward into the future.
C)Demand can be divided into components such as average level,trend,seasonality,cycle and error.
D)All of the above

Answer 1

All of the above

Question 2

When should qualitative methods NOT be used?

A)When historic data are unreliable
B)When it is impossible to obtain historic data
C)For short-range,repetitive decisions
D)When making major,costly decisions,such as facilities location

Answer 2

For short-range,repetitive decisions

Question 3

A small company that manufactures rubber boots is selecting a method to forecast demand for the next 10 years.The company recently expanded its facilities,doubling its capacity.Which of the following forecasting methods would be preferred?

A)Qualitative
B)Simple exponential smoothing
C)Econometric
D)Box-Jenkins

Answer 3

Qualitative

Question 4

A method of forecasting that best describes the flows from one sector of the economy to another is called:

A)Regression
B)Econometric model
C)Input-output model
D)Simulation model

Question 5

Given the following information for period 15,what will be the smoothed mean absolute deviation for period 16? Demand = 120
Forecast = 180
MAD₁₅ = 50
Alpha = 0.3

A)77
B)53
C)17
D)43

Question 6

Using exponential smoothing,if we want forecasts to be very responsive to recent demand,the value of alpha should be:

A)Large
B)Moderate
C)Small
D)The value of alpha does not matter.

Question 7

If one time-series model is used for forecasting a low demand item and another time-series model is used for forecasting a high demand item,which measure of forecast accuracy provides a valid comparison of the errors from these two time-series?

A)CFE
B)MSE
C)MAD
D)MAPE

Question 8

Which of the following is NOT a measure of forecast accuracy?

A)Mean square error
B)Cumulative sum of forecast error
C)Mean absolute deviation of forecast error
D)Cumulative absolute deviation of forecast error

Question 9

The Grand Bakery produces 60 special sourdough rolls every day.Any rolls that are not sold each day are given to the employees.They have collected sales data from the past week: $$\begin{array} { | c | c | } \hline \text { Day } & \text { Rolls sold } \\\hline 1 & 50 \\\hline 2 & 50 \\\hline 3 & 48 \\\hline 4 & 60 \\\hline 5 & 53 \\\hline 6 & 60 \\\hline\end{array}$$ What is the value of F₆ if they use a 3-day weighted moving average with W₁ = 0.6,W₂ = 0.2,and W₃ = 0.2?

A)51.4
B)53.4
C)58.6
D)None of the above

Question 10

What is the exponentially smoothed forecast for week 2? (Use F₁ = 25 and alpha = 0.2)

A)21
B)24
C)32
D)53

Question 11

What is the exponentially smoothed forecast for week 6? (Use F₅ = 33 and alpha = 0.0)

A)33
B)31.7
C)30
D)20

Question 12

If a sales representative tells his or her manager,"I hope to sell 20% more than last year," this should be considered:

A)A forecast
B)A performance measure
C)A goal
D)A production plan

Question 13

Which phrase most closely describes the Delphi forecasting technique?

A)Consumer survey
B)Individual opinions
C)Rounds of anonymous data collection
D)Test markets

Question 14

Using a three-week moving average,what is your forecast for week 6?

A)30
B)35
C)32.5
D)25

Question 15

Using the data from question 11,calculate the forecast for period 7 using a four-period moving average:

A)60
B)43.25
C)57.75
D)55.25

Question 16

A qualitative forecast would most likely be used for:

A)Aggregate planning
B)Scheduling
C)Process design
D)Inventory management

Question 17

A regression model is an example of which type of forecasting method?

A)Causal
B)Historical analogy
C)Qualitative
D)Life-cycle analogy

Question 18

The difference between actual demand and the forecast is:

A)Forecast error
B)Mean absolute percentage error
C)Absolute deviation of forecast error
D)Mean absolute deviation of forecast error

Question 19

Forecast error is used for all of the following EXCEPT:

A)To monitor erratic demand observations or outliers
B)To determine when the forecasting method is no longer tracking actual demand and needs to be reset
C)To determine the capacity cushion
D)To determine parameter values that provide the most accurate forecasts

Question 20

The forecast was 70 units for the current period while actual demand was 76.The forecast for the next period is 75.8.What is alpha if a simple exponential smoothing forecast method is being used?

A)0.004
B)0.967
C)0.040
D)0.097

Question 21

Tracking signal is the ratio between cumulative forecast error and the most recent estimate of mean absolute deviation.

Question 22

Describe each of the five demand components in a time-series (of past demand data).

Question 23

Given the following weekly demand figures,what is the MAD at the end of week 5? $$\begin{array} { | l | l | l | } \hline \text { Week } & \text { Demand } & \text { Forecast } \\\hline 1 & 100 & 120 \\\hline 2 & 120 & 130 \\\hline 3 & 110 & 120 \\\hline 4 & 130 & 125 \\\hline 5 & 160 & 145 \\\hline\end{array}$$

A)10.8
B)11.8
C)12.0
D)13.0

Question 24

The Box-Jenkins method requires 12 periods of past data.

Question 25

All forecasts should include two estimates: An estimate of the demand and an estimate of the forecasting error.

Question 26

Forecasting of demand is always equivalent to forecasting of sales.

Question 27

_____ models are usually more accurate than ______ models for medium-to-long-range forecasts.

A)Time-series,causal
B)Causal,time-series
C)Time-series,qualitative
D)Qualitative,time-series

Question 28

Which of the following is NOT one of the most important factors in selecting a forecasting method?

A)User and system sophistication
B)Time and resources available
C)Data availability
D)Customer preferences

Question 29

Quantitative forecasting methods should be used for predicting the demand patterns of new products introduced in the market.

Question 30

A time-series forecast model includes only a level (average)term,representing past average demand.

Question 31

Simple exponential smoothing forecasts are reliable for forecasting long-term demand patterns.

Question 32

Which of the following is NOT true about Collaborative Planning,Forecasting and Replenishment (CPFR)?

A)The basic idea is to share forecasting information with the suppliers and customers in the supply chain.
B)It is best applied to a few customers representing the bulk of demand.
C)It creates visibility in the supply chain minimizing the occurrence of the bullwhip in supply chains.
D)It requires advanced forecasting tools such as Box-Jenkins to improve the forecasting accuracy.

Question 33

United Colors of Benetton is facing a serious problem.The global fashion garment manufacturer and retailer is well known for its speed of new product introduction.The firm is planning to introduce its 2013 summer collection and wants to estimate demand.Demand from past years are shown below.
Suggest a suitable forecasting method that Benetton could utilize while predicting demand for the upcoming year.Describe the important factors that should be considered while selecting the forecast method.