Question 1

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

Accepted Answer

While forecasting techniques strive for high accuracy, achieving 98.7% accuracy is an unrealistic and overly specific goal. Moreover, the level of accuracy needed may vary depending on the industry and context of the demand forecasting.

Question 2

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

Accepted Answer

Cause-and-Effect models can have multiple independent variables. This allows for a more comprehensive analysis of the relationship between various factors and a particular outcome. It is important, however, to carefully account for the potential interactions and confounding effects between the different independent variables in the model.

Question 3

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.

Accepted Answer

These are all important steps involved in implementing a CPFR process model. Seeking long-term holistic solutions helps to avoid short-sighted decisions and promotes collaboration between partners. Creating clear accountabilities ensures that each partner knows their role and responsibilities in the process. Reducing decision cycle time helps to keep the process efficient and effective.

Question 4

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.

Accepted Answer

CPFR (Collaborative Planning, Forecasting, and Replenishment) is a collaborative business practice that involves sharing forecasts and supply chain information between partners in order to improve efficiency and reduce costs. One of the primary benefits of CPFR is that it helps to strengthen partner relationships by fostering greater trust and communication. Additionally, CPFR enables partners to collaborate on future requirements and planning, which can help to optimize inventory levels and reduce stock outs. Finally, CPFR allows for analysis of sales and order forecasts, which can help partners to identify trends, adjust production schedules, and improve overall supply chain performance.

Question 5

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.

Accepted Answer

In the Delphi method, experts are surveyed during several rounds and their responses are aggregated and summarized without them physically meeting.

Question 6

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

Accepted Answer

These are all commonly used measures to evaluate the accuracy of forecasting models.

Question 7

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

Accepted Answer

CPFR (Collaborative Planning, Forecasting and Replenishment) is a supply chain management strategy that aims to enhance the coordination and communication between trading partners in the supply chain. One of the benefits of CPFR is reducing the bullwhip effect, which refers to the distortion of demand information as it moves up the supply chain, resulting in inefficient inventory management and production planning. By sharing information and working together, CPFR can help minimize the bullwhip effect and improve the overall performance of the supply chain.

Question 8

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

Accepted Answer

The main aim of a good forecasting technique is to reduce the gap between actual demand and forecast demand. By doing this, businesses can make accurate decisions and optimize their resources more effectively.

Question 9

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

Accepted Answer

The text states that the ultimate goal of any forecasting endeavor is to have an accurate and unbiased forecast.

Question 10

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.

Accepted Answer

In exponential smoothing, a higher α (such as 0.8) puts more emphasis on the most recent data, while a lower α (such as 0.2) puts more emphasis on past data, making the forecast less responsive to recent changes.

Question 11

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.

Accepted Answer

This statement is true. Education and buy-in from employees is crucial for the success of any organizational change, including implementing a collaborative planning, forecasting, and replenishment (CPFR) process. Educating employees on the benefits of the process changes can help increase their understanding and support of the new process, while also highlighting the potential disadvantages of maintaining the status quo can help motivate them to embrace the changes.

Question 12

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.

Accepted Answer

Tighter control limits increase sensitivity to changes in demand, allowing for early detection and potentially reducing the need for significant corrective action in the future. However, there may be a greater likelihood of false alarms or exceptions that do not actually require action.

Question 13

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?

Accepted Answer

The Purchasing Managers Index (PMI) is considered the most important index provided by the Institute for Supply Management (ISM) as it is a composite of five weighted, seasonally adjusted indices which include New Orders, Production, Employment, Supplier Deliveries, and Inventories. The PMI is used as an indicator of economic growth or contraction in the manufacturing sector.

Question 14

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.

Accepted Answer

A weighted moving average allows for the weights to be adjusted so that more recent demand trends can be emphasized more, unlike a simple moving average which treats all periods equally.

Question 15

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

Accepted Answer

The statement is actually the opposite. Quantitative forecasting methods rely on mathematical models and historical data, while qualitative forecasting methods involve opinions and intuition.

Question 16

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.

Accepted Answer

The true value of CPFR comes from both the exchange of forecasting information and the sophisticated forecasting algorithms that provide companies with more accurate forecasts. Both elements must work together to maximize the benefits of CPFR.

Question 17

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.

Accepted Answer

The modern day business environment actually deals with a more diverse and fragmented consumer base, which has led to the evolution of a more "pull" oriented environment where suppliers must cater to individual needs and preferences and differentiate themselves from their competitors.

Question 18

Associative forecasting methods are based on opinions and intuition.

Accepted Answer

Associative forecasting methods, also known as causal models, rely on the identification and analysis of variables that are believed to influence the variable being forecasted, rather than on opinions and intuition.

Question 19

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".

Accepted Answer

Trends are not a component of random variations but rather a systematic movement over time. Random variations refer to fluctuations that occur randomly and cannot be explained by any known factors or patterns.

Question 20

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.

Accepted Answer

This statement is true. Simple regression involves using one explanatory variable to predict or forecast a dependent variable, while multiple regression involves using two or more explanatory variables to make the forecast.

Quiz 5: Demand Forecasting