Deck 17: Forecasting

Question 1

Forecasts based on mathematical formulas are referred to as qualitative forecasts.

Answer 1

False

Question 2

The trend toward continuous replenishment in supply chain design has shifted the need for accurate forecasts from long-term to short-term.

Answer 2

True

Question 3

Long-range quantitative forecasts are used to determine future demand for new products,markets,and customers.

Answer 3

False

Question 4

The type of forecasting method selected depends on time frame,demand behavior and causes of behavior.

Question 5

Qualitative forecasts use mathematical techniques and statistical formulas.

Question 6

Because of globalization of markets,managers are finding it increasingly more difficult to create accurate demand forecasts.

Question 7

A seasonal pattern is an oscillating movement in demand that occurs periodically over the short-run and is repetitive.

Question 8

The type of forecasting method used depends entirely on whether the supply chain is continuous replenishment or not.

Question 9

A gradual,long-term up or down movement of demand over time is referred to as a trend.

Question 10

Sharing demand forecasts with supply chain members has resulted in an increased bullwhip effect.

Question 11

Short-midrange forecasts tend to use quantitative models that forecast demand based on historical demand.

Question 12

The type of forecasting method selected depends on time frame,demand behavior,and causes of behavior.

Question 13

Forecasting customer demand is often a key to providing good quality service.

Question 14

In today's competitive environment,effective supply chain management requires absolute demand forecasts.

Question 15

One way to deal with the bullwhip effect is to develop and share the forecasts with other supply chain members.

Question 16

Because of advances in technology,many service industries no longer require accurate forecasts to provide high quality service.

Question 17

Continuous replenishment systems rely heavily on extremely accurate long-term forecasts.

Question 18

Because of heightened competition resulting from globalization,most companies find little strategic value in long-range forecasts.

Question 19

Movements in demand that do not follow a given pattern are referred to as random variations.

Question 20

Many companies are shifting from long-term to short-term forecasts for strategic planning.

Question 21

The larger the mean absolute deviation (MAD)the more accurate the forecast.

Question 22

Because of ease of use and simplicity,exponential smoothing is preferred over smoothing average.

Question 23

A correlation coefficient is a measure of the strength of the linear relationship between an independent and a dependent variable.

Question 24

Exponential smoothing is an averaging method for forecasting that reacts more strongly to recent changes in demand.

Question 25

Time series methods assume that demand patterns in the past are a good predictor of demand in the future.

Question 26

The demand behavior for skis is considered cyclical.

Question 27

Regression is used for forecasting when there is a relationship between the dependent variable (demand)and one or more independent (explanatory)variables.

Question 28

The Delphi method generates forecasts based on informed judgments and opinions from knowledgeable individuals.

Question 29

The most common type of forecasting method for long-term strategic planning is based on quantitative modeling

Question 30

One reason time series methods are popular for forecasting is that they are relatively easy to use and understand.

Question 31

Linear regression relates two variables using a linear model.

Question 32

Correlation in linear regression is a measure of the strength of the relationship between the dependent variable,demand,and an independent (explanatory)variable.

Question 33

The average,absolute difference between the forecast and demand is a popular measure of forecast error.

Question 34

Forecast bias is measured by the per-period average of the sum of forecast errors.

Question 35

Because of the development of advanced forecasting models,managers no longer track forecast error.

Question 36

Time series methods use historical data to predict future demand.

Question 37

The moving average method is used for creating forecasts when there is no variation in demand.

Question 38

The long-term strategic planning process is dependent upon qualitative forecasting methods.

Question 39

Multiple regression analysis can be used to relate demand to two or more dependent variables.

Question 40

A linear regression model that relates demand to time is known as a linear trend line.

Question 41

A ___________ is an up-and-down movement in demand that repeats itself over a period of more than a year.

A)trend
B)seasonal pattern
C)random variation
D)cycle

Question 42

The _______ method uses demand in the first period to forecast demand in the next period. a)naïve
B)moving average
C)exponential smoothing
D)linear trend

Question 43

The closer the smoothing constant,α,is to 1.0 the

A)greater the reaction to the most recent demand.
B)greater the dampening,or smoothing,effect.
C)more accurate the forecast.
D)less accurate the forecast.

Question 44

A forecast

A)predicts what will occur in the future.
B)results from an uncertain process.
C)support strategic planning.
D)All of these answer choices are correct.

Question 45

In ___________________ replenishment,the supplier and customer care continuously update data.

A)demand
B)ongoing
C)continuous
D)forecasted

Question 46

Given the demand and forecast values below,the naïve forecast for September is

A)100.6.
B)99.0.
C)102.0.
D)cannot be determined.

Question 47

A long-range forecast would normally not be used to

A)design the supply chain.
B)implement strategic programs.
C)determine production schedules.
D)plan new products for changing markets.

Question 48

Forecast methods based on judgment,opinion,past experiences,or best guesses are known as ___________ methods.

A)quantitative
B)qualitative
C)time series
D)regression

Question 49

Which of the following is not a type of predictable demand behavior?

A)trend
B)random variation
C)cycle
D)seasonal pattern

Question 50

________________ demand is a key to providing good-quality service.

A)Predicted
B)Forecasted
C)Anticipated
D)Unknown

Question 51

The sum of the weights in a weighted moving average forecast must

A)equal the number of periods being averaged.
B)equal 1.00.
C)be less than 1.00.
D)be greater than 1.00.

Question 52

Selecting the type of forecasting method to use depends on

A)the time frame of the forecast.
B)the behavior of demand and demand patterns.
C)the causes of demand behavior.
D)All of these answer choices are correct.

Question 53

An exponential smoothing forecasting technique requires all of the following except

A)the forecast for the current period.
B)the actual demand for the current period.
C)a smoothing constant.
D)large amounts of historical demand data.

Question 54

The exponential smoothing model produces a naïve forecast when the smoothing constant,α,is equal to

A)0.00.
B)1.00.
C)0.50.
D)2.00

Question 55

A forecast where the current period's demand is used as the next period's forecast is known as a

A)moving average forecast.
B)naïve forecast.
C)weighted moving average forecast.
D)Delphi method.

Question 56

Continuous replenishment relies heavily on ____________term forecast.

A)short-
B)medium-
C)long-
D)All of these answer choices are correct.

Question 57

Forecasts of product demand determine how much

A)inventory is needed.
B)product to make.
C)material to purchase from suppliers.
D)All of these answer choices are correct.

Question 58

The smoothing constant,α,in the exponential smoothing forecast

A)must always be a value greater than 1.0.
B)must always be a value less than 0.10.
C)must be a value between 0.0 and 1.0.
D)should be equal to the time frame for the forecast.

Question 59

The ______________ effect is caused in part by distortion in product demand information caused by inaccurate forecasts.

A)bullwhip
B)regression
C)error
D)None of these answer choices is correct.

Question 60

A qualitative procedure used to develop a consensus forecast is known as

A)exponential smoothing.
B)regression methods.
C)the Delphi technique.
D)naïve forecasting.

Question 61

A forecasting model has produced the following forecasts: At the end of May the tracking signal would be

A)0.000.
B)0.667.
C)1.333.
D)2.143.

Question 62

Given the demand and forecast values shown in the table below, the mean absolute deviation (MAD)through the end of October is

A)9.20
B)-9.20
C)1.00
D)7.00

Question 63

Given the following demand data for the past five months,the three-period moving average forecast for June is

A)103.33.
B)99.00.
C)95.00.
D)92.50

Question 64

If forecast errors are normally distributed then

A)1 MAD = 1σ
B)1 MAD ≈ 0.8 σ
C)0.8 MAD ≈ 1σ
D)1 MAD ≈ 1.96 σ

Question 65

Given the following demand data for the past five months,the four-period moving average forecast for June is

A)96.25.
B)99.00.
C)110.00.
D)93.75.

Question 66

A forecasting model has produced the following forecasts: The mean absolute deviation (MAD)for the end of May is

A)7.0.
B)7.5.
C)10.0.
D)3.0

Question 67

A forecasting model has produced the following forecasts: At the end of May the average error would be

A)7.
B)5.
C)3.
D)1.

Question 68

The weighted moving average forecast for the fifth period,with weights of 0.15 for period 1,0.20 for period 2,0.25 for period 3,and 0.40 for period 4,using the demand data shown below is

A)3,760.
B)3,700.
C)3,650.
D)3,325.

Question 69

The per-period average of cumulative error is called

A)cumulative forecast variation.
B)absolute error.
C)average error.
D)noise.

Question 70

For the demand values and the January forecast shown in the table below the exponential smoothing forecast for March using α = 0.40 is
A)1,200.

A)1,220.
B)1,222.
C)1,225.

Question 71

A forecasting model has produced the following forecasts, the forecast error for February is

A)10.
B)−10.
C)−15.
D)−5

Question 72

If the forecast for July was 3,300 and the actual demand for July was 3,250,then the exponential smoothing forecast for August using α = 0.20 is

A)3,300.
B)3,290.
C)3,275.
D)3,250.

Question 73

A forecasting model has produced the following forecasts: The mean absolute percent deviation (MAPD)for the end of May is

A)0.0250.
B)0.0583.
C)0.5830.
D)0.6670.

Question 74

The _________________ forecast method consists of an exponential smoothing forecast with a trend adjustment factor added to it.

A)exponentially smoothed
B)adjusted exponential smoothing
C)time series
D)moving average

Question 75

The mean absolute percentage deviation (MAPD)measures the absolute error as a percentage of

A)all errors.
B)per-period demand.
C)total demand.
D)the average error.

Question 76

A company wants to produce a weighted moving average forecast for April with the weights 0.40,0.35,and 0.25 assigned to March,February,and January respectively.If the company had demands of 5,000 in January,4,750 in February,and 5,200 in March,then April's forecast is

A)4983.33.
B)4992.50.
C)4962.50.
D)5000.00.

Question 77

For the demand values and the January forecast shown in the table below the exponential smoothing forecast for March using α = 0.30 is

A)489.
B)486.
C)483.
D)480.

Question 78

Given the demand and forecast values shown in the table below, the exponential smoothing forecast for November using α = 0.35 is

A)552.45.
B)553.50.
C)554.55.
D)557.50.

Question 79

Given the demand and forecast values shown in the following table, calculate the three-period moving average forecast for November.

A)516.
B)528.
C)524.
D)515.

Question 80

Given the demand and forecast values shown in the table below, the forecast error for September is

A)10.00.
B)−10.00.
C)1.00.
D)39.00.