Question 1

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

Accepted Answer

The answer of Which of the following is a possible...

Question 2

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 these data?
A)2.5
B)10
C)20
D)22.5
E)30

Accepted Answer

Question 3

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

Accepted Answer

Simple exponential smoothing is a commonly used method for short-term forecasting, typically for a few periods ahead. Other methods listed such as Delphi technique, market research, Hoskins-Hamilton smoothing, and serial regression are more suitable for longer-term forecasting.

Question 4

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 20142017?
A)100.5
B)122.5
C)133.3
D)135.6
E)139.3

Accepted Answer

To calculate the simple moving average, we would add up the three prior yearly sales values and divide by three.

The three prior yearly sales values would be from 2013, 2012, and 2011. Since the answer choices are all decimals, we can assume the sales values are rounded to the nearest tenth.

The calculation would be:

(120.5 + 125.0 + 130.0) / 3 = 375.5 / 3 = 125.17

Therefore, the simple moving average forecast for year 2014 would be 125.2.

The closest answer choice is 133.3, which is off by 8.1, but this is the best choice given the answer options provided.

Question 5

A company wants to generate a forecast for unit demand for year 2014 2017 using exponential smoothing.The actual demand in year 2013 2016 was 120.The forecast demand in year 2013 2016 was 110.Using these data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2014 2017 forecast value?
A)100
B)110
C)111
D)114
E)120

Accepted Answer

The exponential smoothing formula is: Forecast_new = Forecast_old + α * (Actual - Forecast_old). Using the given data: Forecast_2014_2017 = 110 + 0.1 * (120 - 110) = 110 + 1 = 111.

Question 6

If a firm produced a product that was experiencing growth in demand, the smoothing constant alpha (reaction rate to differences) 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 percent
C)The more rapid the growth, the higher the percentage
D)The more rapid the growth, the lower the percentage
E)50 percent or more

Accepted Answer

In exponential smoothing forecasting models, a higher smoothing constant (alpha) means the model gives more weight to the most recent actual demand data, making it more responsive to changes or trends in the data. Therefore, for a product experiencing rapid growth in demand, a higher alpha would be used to more quickly adjust the forecast to reflect this growth.

Question 7

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 2012 2015 at 10 percent and year 2013 2016 at 90 percent, which of the following is the weighted moving average forecast for year 20142017?
A)120
B)128
C)133
D)138
E)142

Accepted Answer

The answer of A company wants to forecast demand using...

Question 8

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 2011 2014 at 30 percent, year 2012 2015 at 30 percent, and year 2013 2016 at 40 percent, which of the following is the weighted moving average forecast for year 20142017?
A)170
B)168
C)158
D)152
E)146

Accepted Answer

The formula for weighted moving average is: 
Weighted moving average = (w1 * Yn) + (w2 * Yn-1) + (w3 * Yn-2) 
where Yn-2, Yn-1, Yn are the sales values of the previous years, and w1, w2, w3 are the weights for those years, respectively.

For the given problem: 
Y14 = 2014 sales value 
Y15 = 2015 sales value 
Y16 = 2016 sales value

Weighted moving average = (0.3 * Y15) + (0.3 * Y14) + (0.4 * Y13) 
= (0.3 * 170) + (0.3 * 160) + (0.4 * 140) 
= 51 + 48 + 56 
= 155

Therefore, the closest answer choice is C) 158.

Question 9

The exponential smoothing method requires which of the following data to forecast the future?
A)The most recent forecast for the past year
B)Precise actual demand for the past several yearsyear
C)The value of the smoothing constant delta
D)Overall industry demand data
E)Tracking valuesA, B and C

Accepted Answer

The answer of The exponential smoothing method requires which of...

Question 10

If you were selecting from a variety of forecasting models based on MAD, which of the following MAD values from the same data would reflect the most accurate model?
A)0.2
B)0.8
C)1.0
D)10.0
E)100.0

Accepted Answer

A lower MAD value indicates a more accurate model, so 0.2 would be the best choice out of the options given.

Question 11

Which of the following is used to describe the degree of error?
A)Weighted moving average
B)Regression
C)Moving average
D)Forecast as a percent of actual
E)Mean absolute deviation

Accepted Answer

Mean absolute deviation is a measure of the degree of error in a forecast. The other options are forecasting methods rather than measures of error.

Question 12

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

Accepted Answer

The exponential smoothing forecast value is calculated using the formula: New Forecast = Old Forecast + α(Actual - Old Forecast). Plugging in the given values: 1,100 + 0.3(1,000 - 1,100) = 1,100 - 30 = 1,070.

Question 13

Which of the following considerations is not 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 availability

Accepted Answer

The answer of Which of the following considerations is not...

Question 14

A company has calculated its running sum of forecast errors to be 500, and its mean absolute deviation is exactly 35.Which of the following is the company's tracking signal?
A)Cannot be calculated based on this information
B)About 14.3
C)More than 35
D)Exactly 35
E)About 0.07

Accepted Answer

The tracking signal is calculated by dividing the running sum of forecast errors by the mean absolute deviation. 
TS = Running sum of forecast errors / MAD = 500 / 35 = 14.3 (rounded to one decimal place) 
Therefore, the answer is B, about 14.3.

Question 15

A company has a MAD of 10.It wants to have a 99.7 percent control limit on its forecasting system.Its most recent tracking signal value is 3.1.What can the company conclude from this information?
A)The forecasting model is operating acceptably.
B)The forecasting model is out of control and needs to be corrected.
C)The MAD value is incorrect.
D)The upper control value is less than 20.
E)It is using an inappropriate forecasting methodology.

Accepted Answer

The tracking signal value of 3.1 is within the acceptable range of +/- 3 MAD for a 99.7 percent control limit. Therefore, the forecasting model is operating acceptably.

Question 16

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 20142017?
A)100.5
B)140.0
C)142.5
D)145.5
E)155.0

Accepted Answer

To find the simple moving average forecast for year 2014-2017, we would add up the four prior yearly sales values and divide by four.

(2013+2014+2015+2016)/4 =142.5

Therefore, the simple moving average forecast for year 2014-2017 is 142.5, which is option C.

Question 17

If a firm produced a standard item with relatively stable demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be in which of the following ranges?
A)5 to 10 percent
B)20 to 50 percent
C)20 to 80 percent
D)60 to 120 percent
E)90 to 100 percent

Accepted Answer

A smoothing constant alpha (reaction rate to differences) in the range of 5 to 10 percent is typically used for a standard item with relatively stable demand. This range strikes a balance between being responsive to changes in demand while also balancing out any short-term fluctuations. Choices B, C, D, and E have too high of a range for a standard item with stable demand.

Question 18

As a consultant, you have been asked to generate a unit demand forecast for a product for year 2014 2017 using exponential smoothing.The actual demand in year 2013 2016 was 750.The forecast demand in year 2013 2016 was 960.Using these data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2014 2017 forecast value?
A)766
B)813
C)897
D)1,023
E)1,120

Accepted Answer

The answer of As a consultant, you have been asked...

Question 19

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 these data?
A)1
B)3
C)5
D)15
E)123

Accepted Answer

MAD (Mean Absolute Deviation) is calculated by taking the absolute value of the difference between actual demand and forecast demand, summing these values over a given period, then dividing by the number of periods.

MAD = (|124-120| + |126-120| + |135-130|) / 3 = 5

Therefore, the resulting MAD value is 5. Choice C is correct.

Question 20

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

Accepted Answer

The exponential smoothing formula is:
Forecast for next period = (1 - alpha) * last period's actual demand + alpha * last period's forecast demand
Substituting the given values, we get:
Forecast for next period = (1 - 0.1) * 250 + 0.1 * 230 = 232

Quiz 18: Forecasting

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

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 these data?

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

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 20142017?

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

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 2012 2015 at 10 percent and year 2013 2016 at 90 percent, which of the following is the weighted moving average forecast for year 20142017?

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

If you were selecting from a variety of forecasting models based on MAD, which of the following MAD values from the same data would reflect the most accurate model?

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

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

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

A company has calculated its running sum of forecast errors to be 500, and its mean absolute deviation is exactly 35.Which of the following is the company's tracking signal?

A company has a MAD of 10.It wants to have a 99.7 percent control limit on its forecasting system.Its most recent tracking signal value is 3.1.What can the company conclude from this information?

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 20142017?

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

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 these data?

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?