Exam 11: Forecasting and Demand Planning

_____ forecasts are needed to plan workforce levels, allocate budgets among divisions, and schedule jobs and resources.

The manager of a gas station along an interstate highway has observed that gasoline sales generally increase each week over the summer months as more families travel by car on vacations. He also believes that sales are sensitive to fluctuations in the price of gasoline. He developed the following regression model: Sales ($) = $59,407 + $509 (Week) + 16,463 (Price/gallon) -The sales forecast for the 11^th week of the summer if the price per gallon is estimated to be $3.00 is:

A(n) _____ is a one-time variation that is explainable.

Which of the following statements is TRUE about exponential smoothing technique?

Explain judgmental forecasting, including grass roots forecasting and the Delphi Method.

Judgmental forecasting should only be used if no historical data are available.

Define time series and its characteristics.

A nine-month simple moving average would approximately equate with what alpha (α) factor for simple exponential smoothing?

Top managers need small-range forecasts of unit sales for individual products (e.g., brands and sizes), for decisions involving financial planning, and for sizing and locating new facilities.

Community General Hospital finds itself treating many bicycle accident victims. Data from the last seven 24-hour period is shown below: Day Bicycle Victims 1 6 2 8 3 4 4 7 5 9 6 9 7 7 a. What is the forecast for day 4 using a moving average model with AP = 3? b.With an alpha value of 0.5 and a starting forecast in day 4 equal to the actual data, what is the exponentially smoothed forecast for day 8? c.What is the mean absolute deviation (MAD) for days 5 to 7 for an exponentially smoothed forecasting model with an alpha value of 0.5 and a starting forecast in day 4 equal to the actual data? d.What is the tracking signal for days 5 to 7 for an exponentially smoothed forecasting model with an alpha value of 0.5 and a starting forecast in day 4 equal to the actual data?

Describe some of the issues that managers must consider in applying forecasting methods in practice.

Discuss the three planning horizons used in forecasting and the types of decisions made in each.

An exponential smoothing model can be found easily by applying Excel's Add Trendline option to a time series.

Consider the sales for six consecutive weeks for Sam's Strawberries. The sales are in "flats" sold. Week Sales 1 16 2 18 3 14 4 10 5 20 6 22 a.Using a three-period moving average, forecast the sales for weeks 4 through 6. b.Use exponential smoothing with ? = 0.3 to forecast sales for weeks 4 through 6. Assume the forecast for week 1 to be 10. c.Use linear regression (time series) to develop a prediction equation that will forecast sales. Then use that prediction equation to get forecasts for weeks 4 through 6. d.Use MAD to pick the best forecasting method of A through C.

An R² of 0.80 means:

Random variation is the unexplained deviation of a time series from a predictable pattern, such as a trend, seasonal, or cyclical pattern.

Month Sales Absolute Error, Forecast 1 Absolute Error, Forecast 2 Jan 35 5 2 Feb 29 1 3 Mar 39 4 4 Apr 42 2 3 May 51 3 1 Jun 56 1 4 -The forecasting error measurement that eliminates the measurement scale factor is the _____.

All of the following are important criteria in choosing a forecasting method EXCEPT:

Explain the difference between a moving average and single exponential smoothing forecasting model.

The smoothing constant, α, used in the basic exponential smoothing model, can range in value from −1 to +1.