Question 1

Refer to the data below for Zanda Corp. What is the linear regression forecast for period 5 (choose the nearest number of whole units)?

Accepted Answer

F₅ = 16 + 5(5.6) = 44 units

Question 2

Given the data below, what is the bias of these forecasts?

Accepted Answer

The error for period 1 is -300, therefore the MFE is -66.7. This is a negative bias.

Question 3

Zanda Corp. has experienced demand in the last four years below.  What is the trend value (b) in the data (choose the closest answer)?

Accepted Answer

b = [328 - (4)(2.5)(30)]/[30 - (4)(2.5)²] = 5.6 per perioda = (30) - (5.6)(2.5) = 16

Question 4

Convex Computer Company makes many different forecasts. Which of the following forecasts is probably the least accurate?

Accepted Answer

The forecast for a specific type of laptop with specific features is likely the least accurate as it relies on many assumptions and variables (such as customer preferences and market trends). The other forecasts are for broader categories of products and are therefore more likely to be accurate.

Question 5

Over a six-month period, the demand for a product has been: June = 200, July = 210, August = 240, September = 240, October = 260, and November = 280. The three-month moving average forecast for December is

Accepted Answer

To compute the three-month moving average forecast for December, we take the average of sales in September, October, and November. 
Average = (240+260+280)/3 = 260. Therefore, the answer is B.

Question 6

For Platinum Nugget Hotel in Las Vegas, Saturday is the best day of the week for business. The gambling take for the hotel on Saturdays over the past four weeks was: Week $Take
1) $250,000
2) $190,000
3) $300,000
4) $280,000
Using a moving average with n = 3 terms, what would be the forecast for week 5?

Accepted Answer

(190,000 + 300,000 + 280,000)/3 = 256,667

Question 7

The demand for housing is characterized by a regular pattern of increasing to a peak, then falling. When the demand reaches a low point, it then repeats the pattern. This pattern usually takes place over a three- to five-year period. This is an example of which type of demand pattern?

Accepted Answer

Seasonality and cycles are regular patterns of repeating highs and lows, as described in this example.

Question 8

Designing postponable products has the potential to allow operations managers to:

Accepted Answer

Postponable products obtain final form after customer demand is actually known. Some forecasts are still necessary (for components), and the timing of demand is not changed.

Question 9

An office manager forecasts demand for office stationery by exponential smoothing, with alpha = 0.4. Actual demand two weeks ago (i.e., the week before last) was 12 boxes, but the forecast for that period was only 10. Actual demand last week was 7. What was the forecast for last week?

Accepted Answer

Forecast = 10 + .4(12 - 10) = 10.8

Question 10

Assume that the forecast for the last period is FIT_t = 200 units, and recent experience suggests a likely sales increase of 10 units each period. Actual sales for the last period reached 230 units. Assume a smoothing coefficient of a = 0.20 and a trend smoothing coefficient of β = 0.10. What is the ADJUSTED forecast for the next period?

Accepted Answer

T_t₊₁ = T_t + β(F_t₊₁ - FIT_t) = 10 + 0.10 (206 - 200) = 10 + 0.6 = 10.6.FIT_t₊₁ = F_t₊₁ + T_t₊₁ = 206 + 10.6 = 216.6.

Question 11

Assume that the forecast for the last period is FIT_t = 200 units, and recent experience suggests a likely sales increase of 10 units each period. Actual sales for the last period reached 230 units. Assume a smoothing coefficient of a = 0.20 and a trend smoothing coefficient of β = 0.10. Demand in period t + 1 turned out to be 220. What is the adjusted forecast for period t + 2 (choose the closest answer)?

Accepted Answer

F_t₊₂ = FIT_t+1 + a(d_t+1 - FIT_t+1) = 216.6 + 0.20 (220 - 216.6) = 217.28T_t₊₂ = T_t+1 + β(F_t₊₂ - FIT_t+1) = 10.6 + 0.10 (217.28 - 216.6) = 10.6 + 0.068 = 10.668FIT_t₊₂ = F_t₊₂ + T_t₊₂ = 216.6 + 10.668 = 227.268

Question 12

The primary difference between demand management and demand forecasting is:

Accepted Answer

Demand management proactively attempts to influence demand, while forecasting simply tries to predict demand.

Question 13

Jones Company had sales of $100,000 last week. The company had forecasted that sales would be $120,000. Using exponential smoothing with a smoothing constant of 0.2, what is the forecast for this week's sales?

Accepted Answer

120,000 + .2(100,000 - 120,000) = 116,000

Question 14

A company has the information shown in the chart below regarding its forecast performance in the past three periods.  What is the mean absolute deviation (MAD)?

Accepted Answer

Summing the absolute values of the errors and determining the average results in (300 + 200 + 100)/3 = 200.

Question 15

Alpha Company sold 2,000 widgets yesterday. It had forecasted sales of 1,900 units. Using exponential smoothing with a smoothing constant of 0.6, what is the forecast for today's sales of widgets?

Accepted Answer

1,900 + 0.6(2,000 - 1,900) = 1,960

Question 16

Suppose your firm is about to launch a radically new product. The type of demand forecasting system you would most likely use is:

Accepted Answer

Radically new products do not have any data to support quantitative forecasting. Only executive judgment is a qualitative technique.

Question 17

For Platinum Nugget Hotel in Las Vegas, Saturday is the best day of the week for business. The gambling take for the hotel on Saturdays over the past four weeks was: Week $Take 1. $250,000 2) $190,000 3) $300,000 4) $280,000 Platinum Nugget uses a three-period weighted moving average to forecast demand, with a_t = 0.6, a_t-1 = 0.3, and a_t-2 = 0.1. What is the forecast for week 5?

Accepted Answer

(.6(280,000) + .3(300,000) + .1(190,000))/3 = 277,000

Question 18

Strategic demand planning would best be utilized:

Accepted Answer

Strategic demand planning is necessary for long-term decisions such as building or closing a plant. The others described are shorter-term decisions.

Question 19

In recent years some companies have begun to work closely with their customers and/or suppliers by sharing information to develop demand plans and execute those plans. The procedure they are following is known as:

Accepted Answer

Collaborative planning, forecasting, and replenishment is a process for sharing information and plans with supply chain partners.

Question 20

Assume that the forecast for the last period is FIT_t = 200 units, and recent experience suggests a likely sales increase of 10 units each period. Actual sales for the last period reached 230 units. Assuming a smoothing coefficient of a = 0.20 and a trend smoothing coefficient of β = 0.10, what is the BASE forecast for the next period?

Accepted Answer

F_t₊₁ = FIT_t + a(d_t - FIT_t) = 200 + 0.20 (230 - 200) = 206

Quiz 12: Demand Planning: Forecasting and Demand Management

Refer to the data below for Zanda Corp. What is the linear regression forecast for period 5 (choose the nearest number of whole units) ?