Deck 2: Forecasting demand

Question 1

Using the following demand data, initialize and build a model to forecast the demand for June.When the first 3 months are used to initial a simple exponential smoothing model, what is the base value made at the end of month 2 or the initialized forecast for March?
$$\begin{array} { | l | c | c | c | c | c | } \hline \text { Month } & 1 & 2 & 3 & 4 & 5 \\\hline \text { Demand } & 50 & 25 & 60 & 20 & 80 \\\hline\end{array}$$

A) 50
B) 37.5
C) 45
D) 25

Answer 1

45

Question 2

John is trying to initialize the trend estimates for an exponential smoothing model with trends using the following demand data.He set the initialized trend estimate at the end of period 5 to __________.Complete the sentence correctly.
$$\begin{array} { c c c c c c } \text { Period } & 1 & 2 & 3 & 4 & 5 \\\hline \text { Demands } & 56 & 59 & 53 & 60 & 63\end{array}$$

A) 3.14
B) 1.25
C) 1.75
D) 5.25

Answer 2

1.75

Question 3

Use an exponential smoothing model with trends to forecast for period 5.Select a correct demand forecast using the demand table below.
The base value at the end of period 1 is 300 while the tread is -50.The base value smoothing constant is 0.2 and the trend smoothing constant is 0.4.
$\begin{array} { | l | c | c | c | } \hline \text { Period } & 2 & 3 & 4 \\\hline \text { Demand } & 250 & 120 & 130 \\\hline\end{array}$

A) 72
B) 115
C) 65
D) 210

Answer 3

72

Question 4

The conceptual forecasting framework does not exclude human judgments.When does the framework suggest these judgments should be used?

A) Right after Mathematical Model is generated
B) Before historical data is gathered
C) Right after historical data is gathered
D) Before the selection of a forecasting technique

Question 5

Identify the component of time series below in the table.
$$\begin{array} { c l l l l l l l l l l l l } \text { Month } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 & 11 & 12 \\\hline \text { Actual } & 120 & 130 & 70 & 10 & 5 & 15 & 25 & 7 & 50 & 70 & 80 & 160\\\text { Demands }\end{array}$$
1)Positive trend
2)Seasonality
3)Random
4)Negative trend

A) (1) and (2)
B) (2) and (4)
C) (2)
D) (3)

Question 6

The table below includes the actual demands and forecasted demand for each period.Based on the data, which of the following is not correct?
$$\begin{array} { c l l l l l } \text { Period } & 1 & 2 & 3 & 4 & 5 \\\hline \text { Actual Demands } & 43 & 44 & 70 & 10 & 5 \\\text { Forecast Demands } & 60 & 50 & 80 & 15 & 45\end{array}$$

A) The Bias value is -15.6
B) The demand data shows a positively increasing trend
C) The forecast is consistently overestimating the demands (higher forecasts)
D) The MAD value is 15.6

Question 7

The annual demand of the year 2010 is provided below.Find the forecasted demand for January, 2011.
Use a 3-month weighted moving average method.The weight ratio is 3:2:1 with the heaviest weight applied to the most current data.
$$\begin{array} { c l l l l l l l l l l l l } \text { Month } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 & 11 & 12 \\\hline \text { Actual Demands } & 120 & 130 & 70 & 10 & 5 & 15 & 25 & 7 & 50 & 70 & 80 & 160\end{array}$$

A) 93.04
B) 5.9
C) 20.22
D) 23.14

Question 8

John is trying to initialize the seasonality indexes for an exponential smoothing model with seasonality using the following demand data.Among his many decisions, one was to set the seasonality index for the ______ quarter to ______.Fill in the blanks correctly.
$$\begin{array} { c c c c c } \text { Quarter } & 1 & 2 & 3 & 4 \\\hline \text { Demand } & 40 & 250 & 190 & 110\end{array}$$

A) 1st/0.545
B) 2nd/2.124
C) 4th/0.7457
D) 3rd/1.988

Question 9

The exponential smoothing model with trends uses 3 steps to generate forecasts.Among these steps, __________ can be described as updating the ________________.Fill in the blanks correctly.

A) Step 1/Trend estimate
B) Step 1/Base value
C) Step 2/Seasonality Index
D) Step 3/Trend estimate

Question 10

The Ticket touring agency is coming out with a new tour package.While this is a new product, it is expected to be received by customers in the same manner as with the Dynasty tour package.The table below is the last year's demand for the Dynasty tour package.Which of the following months should the agency provide the most capacity?
$$\begin{array} { c l l l l l l l l l l l l } \text { Month } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 & 11 & 12 \\\hline \text { Actual Demands } & 120 & 130 & 70 & 10 & 5 & 15 & 25 & 7 & 50 & 70 & 80 & 160\end{array}$$

A) December
B) October
C) May
D) March

Question 11

Forecasting drives all of the key business functions.Among the following cases, select the cases that are the least suited for the use of quantitative forecasting.
1)Demand of radically innovative new product
2)Supply of agricultural products
3)Demand of commodities
4)The rate of new product production

A) (1)
B) (1) and (2)
C) (2) and (4)
D) (4)

Question 12

Describe the Conceptual Forecasting Framework in your own words.

Question 13

Does the Conceptual Forecasting Framework only assume the use of Quantitative forecasting? Explain in your own words.

Question 14

Among the following choices, select the ones that are not examples of Qualitative Forecasting methods.
1)Delphi method
2)Exponential smoothing method
3)Triad method
4)Focus groups

A) (1) and (2)
B) (2) and (3)
C) (2), (3), and (4)
D) (1)

Question 15

The table below includes the actual demands and forecasted demand for each period.Which of the following is the correct Mean absolute deviation (MAD)value for this data?
$\begin{array}{cccccc}\text { Period }&1&2&3&4&5\\\hline \text { Actual Demands } & 100 & 120 & 115 & 90 & 79 \\\text { Forecast Demands } & 90 & 110 & 130 & 135 & 90\end{array}$

A) 21.5
B) 18.2
C) 13.9
D) -10.2

Question 16

John is using an exponential smoothing model with seasonality.What is MAD value? The base value smoothing constant is 0.2 while the seasonality constant is 0.3.Use the first year to initialize the model.
$$\begin{array} { c c c c c c c c c } \text { Quarter } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 \\\hline \text { Demand } & 40 & 250 & 190 & 110 & 69 & 330 & 320 & 280\end{array}$$

A) 80.01
B) 67.72
C) 92.13
D) 103.76

Question 17

Forecasting framework illustrates the sequences that should be followed.According to the framework, what is next step once the forecast interval is established?

A) Collect and analyze data
B) Determine the forecast purpose
C) Select a forecasting technique
D) Initialize the forecast

Question 18

The table below includes the actual demands and forecasted demand for each period.Which of the following is the correct Bias value for this data?

Question 19

Using a 3-month moving average forecast, what of the following is not correct based on the demand table below?
$$\begin{array} { c l l l l l l l l l l l l } \text { Month } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 & 11 & 12 \\\hline \text { Actual Demands } & 120 & 130 & 70 & 10 & 5 & 15 & 25 & 7 & 50 & 70 & 80 & 160\end{array}$$
1)The MAD value is 5.02
2)The forecast tends to overestimate the demands (higher forecasts)
3)The Bias value is -1.48
4)At least 5 months' worth of data is needed to initialize a forecast

A) (1) and (4)
B) (2)
C) (1), (2) and (4)
D) (4)

Question 20

For a forecast to be usable, it needs to pass criteria which include aspects such as _________ and ___________.Fill the blanks.

A) Simplicity/Completeness
B) Accuracy/Simplicity
C) Comprehensiveness/Accuracy
D) Flexibility /Accuracy

Question 21

List the forecasting model that can forecast several periods ahead the available data with only a relatively small loss in accuracy.

Question 22

Describe the meaning of model building using data in your own words.

Question 23

Build a forecast model using a simple exponential smoothing model with 2009 demand provided below.The exponential smoothing constant is 0.3.What is the bias for this model when the Forecast for January is set at 24?

Question 24

When generating the forecast for year 3 season 2 using an exponential smoothing model with seasonality, which seasonality index is subject to updating?

Question 25

Interpret a bias of -40 in a sentence.

Question 26

Define in one sentence what a time series is.

Question 27

Provide a detailed description of the demand in the table below.

Question 28

John is trying to initialize the seasonality indexes for an exponential smoothing model with seasonality.What is the forecast for quarter 9? The base value smoothing constant is 0.2 while the seasonality constant is 0.3.Use the first year to initialize the model.

Question 29

Dave is use an exponential smoothing model with trends to forecast for period 5.After gathering the data, he is trying to make a decision regarding the constants.Currently, base value smoothing constant is 0.3 and the trend smoothing constant is 0.2.What is the bias difference if Dave decides to decrease the base value smoothing constant to 0.1?
The base value at the end of period 1 is 300 while the tread is -50.

Question 30

What is the difference between bias and MAD?