Deck 6: Forecasting

Question 1

One measure of the accuracy of a forecasting model is the

A)smoothing constant
B)trend component
C)mean absolute deviation
D)seasonal index

Answer 1

C

Question 2

Short-term,unanticipated,and nonrecurring factors in a time series provide the random variability known as

A)uncertainty.
B)the forecast error.
C)the residuals.
D)the irregular component.

Answer 2

D

Question 3

Which of the following forecasting methods puts the least weight on the most recent time series value?

A)exponential smoothing with $\alpha$ = .3
B)exponential smoothing with $\alpha$ = .2
C)moving average using the most recent 4 periods
D)moving average using the most recent 3 periods

Answer 3

exponential smoothing with $\alpha$ = .2

Question 4

To select a value for $\alpha$ for exponential smoothing

A)use a small $\alpha$ when the series varies substantially.
B)use a large $\alpha$ when the series has little random variability.
C)use any value between 0 and 1
D)All of the alternatives are true.

Question 5

The trend component is easy to identify by using

A)moving averages
B)exponential smoothing
C)regression analysis
D)the Delphi approach

Question 6

Time series methods

A)discover a pattern in historical data and project it into the future.
B)include cause-effect relationships.
C)are useful when historical information is not available.
D)All of the alternatives are true.

Question 7

Seasonal components

A)cannot be predicted.
B)are regular repeated patterns.
C)are long runs of observations above or below the trend line.
D)reflect a shift in the series over time.

Question 8

A qualitative forecasting method that obtains forecasts through "group consensus" is known as the

A)Autoregressive model
B)Delphi approach
C)mean absolute deviation
D)None of these alternatives is correct.

Question 9

Using exponential smoothing,the demand forecast for time period 10 equals the demand forecast for time period 9 plus

A) $\alpha$ times (the demand forecast for time period 8)
B) $\alpha$ times (the error in the demand forecast for time period 9)
C) $\alpha$ times (the observed demand in time period 9)
D) $\alpha$ times (the demand forecast for time period 9)

Question 10

Forecast errors

A)are the difference in successive values of a time series
B)are the differences between actual and forecast values
C)should all be nonnegative
D)should be summed to judge the goodness of a forecasting model

Question 11

Linear trend is calculated as T_t = 28.5 + .75t.The trend projection for period 15 is

A)11.25
B)28.50
C)39.75
D)44.25

Question 12

The focus of smoothing methods is to smooth

A)the irregular component.
B)wide seasonal variations.
C)significant trend effects.
D)long range forecasts.

Question 13

The multiplicative model

A)uses centered moving averages to smooth the trend fluctuations.
B)removes trend before isolating the seasonal components.
C)deseasonalizes a time series by dividing the values by the appropriate seasonal index.
D)provides a unique seasonal index for each observation of the time series.

Question 14

Gradual shifting of a time series over a long period of time is called

A)periodicity.
B)cycle.
C)regression.
D)trend.

Question 15

If data for a time series analysis is collected on an annual basis only,which component may be ignored?

A)trend
B)seasonal
C)cyclical
D)irregular

Question 16

Which of the following exponential smoothing constant values puts the same weight on the most recent time series value as does a 5-period moving average?

A) $\alpha$ = .2
B) $\alpha$ = .25
C) $\alpha$ = .75
D) $\alpha$ = .8

Question 17

The forecasting method that is appropriate when the time series has no significant trend,cyclical,or seasonal effect is

A)moving averages
B)mean squared error
C)mean average deviation
D)qualitative forecasting methods

Question 18

Which of the following is a qualitative forecasting method?

A)trend projection
B)time series method
C)smoothing method
D)Delphi method

Question 19

The time series component that is analogous to the seasonal component but over a longer period of time is the

A)irregular component
B)trend component
C)causal component
D)cyclical component

Question 20

Causal models

A)should avoid the use of regression analysis.
B)attempt to explain a time series' behavior.
C)do not use time series data.
D)All of the alternatives are true.

Question 21

Exponential smoothing with $\alpha$ =.2 and a moving average with n = 5 put the same weight on the actual value for the current period.

Question 22

A time series model with a seasonal component will always involve quarterly data.

Question 23

Trend in a time series must be linear.

Question 24

The exponential smoothing forecast for any period is a weighted average of all the previous actual values for the time series.

Question 25

Smoothing methods are more appropriate for a stable time series than when significant trend and/or seasonal variation are present.

Question 26

An alpha ( $\alpha$ )value of .2 will cause an exponential smoothing forecast to react more quickly to a sudden drop in demand than will an $\alpha$ equal to .4.

Question 27

Any recurring sequence of points above and below the trend line lasting less than one year can be attributed to the cyclical component of the time series.

Question 28

The mean squared error is influenced much more by large forecast errors than by small errors.

Question 29

All quarterly time series contain seasonality.

Question 30

Seasonal components with values above 1.00 indicate actual values below the trend line.

Question 31

Quantitative forecasting methods do not require that patterns from the past will necessarily continue in the future.

Question 32

Qualitative forecasting techniques should be applied in situations where time series data exists,but where conditions are expected to change.

Question 33

To make period-to-period comparisons more meaningful and identify trend,the time series should be deseasonalized.

Question 34

For a multiplicative time series model,the sum of the seasonal indexes should equal the number of seasons.

Question 35

Time series methods base forecasts only on past values of the variables.

Question 36

A four-period moving average forecast for period 10 would be found by averaging the values from periods 10,9,8,and 7.

Question 37

If the random variability in a time series is great and exponential smoothing is being used to forecast,then a high alpha ( $\alpha$ )value should be used.

Question 38

If a time series has a significant trend component,then one should not use a moving average to forecast.

Question 39

If the random variability in a time series is great,a high SYMBOL 97 \f "Symbol" value should be used to exponentially smooth out the fluctuations.

Question 40

With fewer periods in a moving average,it will take longer to adjust to a new level of demand.

Question 41

A trend line for the attendance at a restaurant's Sunday brunch is given by
Number = 264 + .72(t)
How many guests would you expect in week 20?

Question 42

Use the following to forecast a value for period 14,a second quarter.
T = 16.32 - .18(t)
C₂ = .91
S₂ = .75

Question 43

Quarterly billing for water usage is shown below.

a.Find the seasonal index for each quarter.
b.Deseasonalize the data.
c.Find the trend line.
d.Assume there is no cyclical component and forecast the summer billing for year 5.

Question 44

Connie Harris,in charge of office supplies at First Capital Mortgage Corp. ,would like to predict the quantity of paper used in the office photocopying machines per month.She believes that the number of loans originated in a month influence the volume of photocopying performed.She has compiled the following recent monthly data:

a.Develop the least-squares estimated regression equation that relates sheets of photocopy paper used to loans originated.
b.Use the regression equation developed in part (a)to forecast the amount of paper used in a month when 65 loan originations are expected.

Question 45

Sales (in thousands)of the new Thorton Model 506 convection oven over the eight-week period since its introduction have been as follows:

a.Which exponential smoothing model provides better forecasts,one using SYMBOL 97 \f "Symbol" = .6 or $\alpha$ = .2? Compare them using mean squared error.
b.Using the two forecast models in part (a),what are the forecasts for week 9?

Question 46

The number of girls who attend a summer basketball camp has been recorded for the seven years the camp has been offered.Use exponential smoothing with a smoothing constant of .8 to forecast attendance for the eighth year.
47,68,65,92,98,121,146

Question 47

In order to forecast the attendance at an annual tennis tournament,a model has been developed which uses attendance from the previous year and the amount spent for advertising this year.From the years shown in the table,forecast the attendance for years 2-5 and calculate the forecast error.
The multiple regression model is Attendance = 6738 + .23($)+ .25 (Attlag)

Question 48

Monthly sales at a coffee shop have been analyzed.The seasonal index values are
and the trend line is 74123 + 26.9(t).Assume there is no cyclical component and forecast sales for year 8 (months 97 - 108).

Question 49

Quarterly revenues (in $1,000,000's)for a national restaurant chain for a five-year period were as follows:

a.Determine the appropriate seasonal index values for this time series.
b.Determine the appropriate trend value for this time series.
c.Forecast the revenues for the next four quarters.

Question 50

The number of cans of soft drinks sold in a machine each week is recorded below.Develop forecasts using a three period moving average.
338,219,278,265,314,323,299,259,287,302

Question 51

The number of plumbing repair jobs performed by Auger's Plumbing Service in each of the last nine months are listed below.

a.Assuming a linear trend function,forecast the number of repair jobs Auger's will perform in December using the least squares method.
b.What is your forecast for December using a three-period weighted moving average with weights of .6,.3,and .1? How does it compare with your forecast from part (a)?

Question 52

Use a four period moving average to forecast attendance at baseball games.Historical records show
5346,7812,6513,5783,5982,6519,6283,5577,6712,7345

Question 53

Business at Terry's Tie Shop can be viewed as falling into three distinct seasons: (1)Christmas (November-December); (2)Father's Day (late May - mid-June);and (3)all other times.Average weekly sales (in $'s)during each of these three seasons during the past four years has been as follows:
Determine a forecast for the average weekly sales in year 5 for each of the three seasons.

Question 54

The average SAT verbal score for students from one high school over the last ten exams is
508,490,502,505,493,506,492,490,503,501
Do the scores support an increasing or a decreasing trend?

Question 55

The number of properties newly listed with a real estate agency in each quarter over the last four years is given.Calculate the seasonal index values.

Question 56

A 24-hour coffee/donut shop makes donuts every eight hours.The manager must forecast donut demand so that the bakers have the fresh ingredients they need.Listed below is the actual number of glazed donuts (in dozens)sold in each of the preceding 13 eight-hour shifts.
Forecast the demand for glazed donuts for the three shifts of June 8 and the three shifts of June 9.

Question 57

The number of pizzas ordered on Friday evenings between 5:30 and 6:30 at a pizza delivery location for the last 10 weeks is shown below.Use exponential smoothing with smoothing constants of .2 and .8 to forecast a value for week 11.Compare your forecasts using MSE.Which smoothing constant would you prefer?
58,46,55,39,42,63,54,55,61,52

Question 58

A hospital records the number of floral deliveries its patients receive each day.For a two week period,the records show
15,27,26,24,18,21,26,19,15,28,25,26,17,23
Use exponential smoothing with a smoothing constant of .4 to forecast the number of deliveries.

Question 59

The number of new contributors to a public radio station's annual fund drive over the last ten years is
63,58,61,72,98,103,121,147,163,198
Develop a trend equation for this information,and use it to predict next year's number of new contributors.

Question 60

A customer comment phone line is staffed from 8:00
a.Use this information to calculate a seasonal index.
a.m.to 4:30 p.m.five days a week.Records are available that show the number of calls received every day for the last five weeks.

b.Deseasonalize the data.
c.Find the trend line.
d.Assume there is no cyclical component and forecast the calls for week 6.