Which one of the following statements is TRUE?
A) The ideal of zero bias and zero MAD can be accomplished by systematically searching for the best values of the smoothing constants.
B) Bias is always less than MAD.
C) For projections of more stable demand patterns without trends, seasonal influences, or cyclical influences, use larger values of n in the simple moving average approach.
D) Getting a single forecast of 500 units for the month of July is better than getting a forecast that there is a 95 percent chance that demand for July will be between 450 and 550 units.

Question

Quizplus · Accepted Answer

For more stable demand patterns without trends, seasonal influences, or cyclical influences, a larger value of n in the simple moving average approach can be used. This is because a larger value of n helps to smooth out any random fluctuations and provide a better estimate of the underlying average demand. The ideal of zero bias and zero MAD can never be accomplished, but the aim is to find the best values of the smoothing constants that will result in a forecast with as little bias and MAD as possible. It is also better to have a range of forecast values, such as the 95 percent confidence interval, rather than a single point forecast because it provides more information about the uncertainty of the forecast.

Which One of the Following Statements Is TRUE