Question 1

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

Accepted Answer

Correlation measures the strength and direction of the relationship between two variables, while linear regression involves using one variable to predict the value of another variable. In linear regression, the dependent variable (what is being predicted) is influenced by independent variables (predictors). The strength of the relationship between the dependent variable and each independent variable can be measured by correlation.

Question 2

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

Accepted Answer

While forecasting models have improved, managers still track forecast error to evaluate the effectiveness and accuracy of their models. Keeping track of forecast error allows managers to identify problems and make necessary adjustments to improve future forecasts.

Question 3

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

Accepted Answer

A linear trend line is a common method for forecasting and analyzing time series data using a linear regression model. It assumes a linear relationship between time and the variable being analyzed, and can be used to make predictions about future values of the variable based on past trends.

Question 4

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

Accepted Answer

The answer of Multiple regression analysis can be used to...

Question 5

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

Accepted Answer

The answer of Because of ease of use and simplicity,...

Question 6

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

Accepted Answer

Time series methods involve analyzing patterns and trends in historical data to make predictions for the future. These methods are often easy to apply and interpret, making them a popular choice for forecasting. Additionally, time series models can provide valuable insights into the underlying factors driving a particular trend, allowing analysts to make informed decisions based on their findings.

Question 7

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

Accepted Answer

The larger the MAD, the less accurate the forecast is because it indicates a greater deviation from the actual data points. A smaller MAD indicates a more accurate forecast.

Question 8

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

Accepted Answer

The moving average method is used for creating forecasts when there is variation in demand. It takes into account the previous observations and smooths out any randomness or fluctuations in the data in order to create a more accurate forecast.

Question 9

Time series methods use historical data to predict future demand.

Accepted Answer

Time series methods analyze patterns and trends in historical data to forecast future patterns and trends.

Question 10

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

Accepted Answer

A correlation coefficient measures the strength and direction of the linear relationship between two variables.

Question 11

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

Accepted Answer

Qualitative forecasting methods, such as expert opinions and market research, are commonly used in long-term strategic planning to account for subjective factors that cannot be easily quantified.

Question 12

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

Accepted Answer

The Delphi method relies on input from knowledgeable individuals through a series of surveys or questionnaires to generate forecasts.

Question 13

Linear regression relates two variables using a linear model.

Accepted Answer

Linear regression uses a linear model to relate two variables, making the statement true.

Question 14

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

Accepted Answer

The answer of The most common type of forecasting method...

Question 15

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

Accepted Answer

Exponential smoothing assigns higher weights to more recent data points, making it react more strongly to changes in demand in the short term.

Question 16

The demand behavior for skis is considered cyclical.

Accepted Answer

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Question 17

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

Accepted Answer

The answer of Forecast bias is measured by the per-period...

Question 18

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

Accepted Answer

Regression analysis helps in identifying the relationship between the dependent variable and one or more independent variables, and then using that relationship to make predictions about the dependent variable. Therefore, it is used for forecasting when there is a relationship between the dependent variable and one or more independent variables.

Question 19

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

Accepted Answer

The average absolute difference, also known as Mean Absolute Deviation (MAD), is a commonly used measure of forecast error.

Question 20

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

Accepted Answer

Time series analysis is based on the assumption that past demand patterns can be used to predict future demand patterns. This is because it is assumed that the underlying factors that influence demand are relatively stable over time, and that these factors will continue to influence demand in the future. However, it is important to note that this assumption may not always hold, and that other factors such as changes in market conditions or consumer preferences can also affect future demand.

Quiz 21: Operational Decison-Making Tools: Transportation and Transshipment Models