Deck 10: Sourcing and Supply Management

Question 1

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?

A)Autocorrelation
B)Seasonality and cycles
C)Step change
D)Trend

Answer 1

Seasonality and cycles

Question 2

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

A)Regression.
B)Executive judgment.
C)Time series.
D)Moving average.
E)Exponential smoothing.

Answer 2

Executive judgment.

Question 3

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 seven.What was the forecast for last week?

A)10.8
B)11.0
C)11.2
D)8.2
E)8.8

Answer 3

10.8

Question 4

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

A)44
B)42
C)34
D)28

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:

A)240.
B)260.
C)280.
D)300.

Question 6

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?

A)$124,000
B)$116,000
C)$104,000
D)$112,000

Question 7

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?

A)2,060
B)1,940
C)2,040
D)1,960

Question 8

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 α = 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.)

A)227.3
B)215.9
C)217.3
D)221.3

Question 9

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)?

A)200
B)225
C)−66.67
D)1,200

Question 10

The primary difference between demand management and demand forecasting is:

A)Forecasting is only possible when quantitative data are available.
B)Demand management is proactive,while forecasting attempts to predict.
C)A firm cannot execute both approaches simultaneously.
D)One approach deals with uncertainty,while the other deals with known demand.

Question 11

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

A)Total number of computers (laptops and desktops)to be sold next month.
B)Total number of laptops to be sold next month.
C)Total number of desktops to be sold next year.
D)Total number of laptops with 2 gigabyte RAM,80 gigabyte hard drive,and 16x DVD drive to be sold next year.

Question 12

$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?

A)$232,000
B)$237,000
C)$277,000
D)$295,000

Question 13

Strategic demand planning would best be utilized:

A)To direct day-to-day operations in a manufacturing plant.
B)To determine plans for employee overtime.
C)To decide whether or not to close a manufacturing plant.
D)To determine plans for hiring or laying off employees.
E)All answers are correct.

Question 14

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

A)5.6 units/period
B)2.5 units/period
C)2.87 units/period
D)−1.25 units/period

Question 15

Jones Corp.has noticed that sales of its product seem to be related to a variable it calls Gamma.It has developed the data shown below. Develop a simple linear regression from the data and tell Jones what the sales forecast will be if Jones expects Gamma to be 16.(Round your forecast to the nearest number of whole units.)

A)31
B)33
C)28
D)34

Question 16

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:

A)Coordinated foreplanning of requirements.
B)Joint planning of demand forecasts.
C)Collaborative planning,forecasting,and replenishment.
D)Conjoint analysis and forecasting.

Question 17

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 α = 0.20 and a trend smoothing coefficient of β = 0.10.What is the ADJUSTED forecast for the next period?

A)210.0
B)210.6
C)216.6
D)216.0

Question 18

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

A)Positive.
B)Negative.
C)There is no bias.

Question 19

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 α = 0.20 and a trend smoothing coefficient of β = 0.10,what is the BASE forecast for the next period?

A)210
B)206
C)236
D)226

Question 20

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

A)Ignore forecasts.
B)Move from build-to-stock to assemble or make-to-order operations.
C)Influence the timing of demand.
D)All the items are correct.

Question 21

Using the data below,determine the MAPE.

A)5.0 percent
B)7.25 percent
C)5.99 percent
D)5.41 percent

Question 22

A company has the data shown in the chart below concerning its forecast performance over the past four time periods. Complete the chart and compute the MAD.

A)2
B)20
C)10
D)100

Question 23

Which of the following statements best describes demand forecasting?

A)The objective of forecasting is to develop the best statistical model.
B)Better forecasts usually come from combinations of inputs.
C)Executives usually make better forecasts than machines.
D)Forecasting and demand planning have little to do with each other.

Question 24

A computer program that uses algorithms to learn by analyzing many different types of models applied to large amounts of data is called:

A)Historical analogy.
B)Focused forecasting.
C)Artificial intelligence.
D)Algorithmic modeling.

Question 25

The tracking signal will suggest to a manager that:

A)Demand for an item is changing.
B)There is seasonality in demand.
C)A forecast mode's parameters may need adjustment.
D)All the answers are correct.

Question 26

Apply regression to the data shown below.The forecast for next January's sales is:

A)150.0
B)477.3
C)450.0
D)Not enough information is given to make a forecast

Question 27

Use the data below and the regression model. What is the sales forecast if Gamma is expected to be 21? (Round your forecast to the nearest number of whole units.)

A)42
B)36
C)48
D)39

Question 28

A forecasting technique that seeks inputs from people who are in close contact with customers is known as:

A)Historical analogy.
B)Focused forecasting.
C)Grassroots forecasting.
D)Marketing research.

Question 29

A company uses actual demand data to develop its seasonal indices.It has the data shown below for each quarter of the previous two years. What is the seasonal index for Quarter 1?

A)0.714
B)0.750
C)1.25
D)0.732

Question 30

Which of the following factors should be considered when one designs a forecasting process?

A)Time horizon for planning.
B)Level of detail for planning.
C)Availability of data.
D)All the answers are correct.

Question 31

In examining the data below,the manager exclaimed that he was very happy to see no bias in the forecasts.How would you respond to the manager?

A)You are correct.
B)I'm sorry,but there is a slight negative bias.
C)I'm sorry,but there appears to be a slight positive bias.
D)There is no way to estimate bias with the given information.

Question 32

How does product design affect forecasting accuracy?

A)Postponable product designs remove the need to forecast demand for final product configurations.
B)A popular product design improves the demand volume and forecast.
C)Forecast accuracy is not related to product design.
D)None of the statements are true.

Question 33

A forecasting system that changes the value of the alpha parameter in response to the level of forecast error is known as:

A)A tracking signal.
B)A trend-enhanced exponential smoothing model.
C)A causal regression.
D)A time series model.
E)An adaptive model.

Question 34

Apply regression to the data shown below.The slope of the line estimated using the regression model is:

A)50.0
B)45.3
C)27.3
D)15.4

Question 35

Long-term/strategic demand planning is typically done using what units?

A)Total business unit sales
B)Total product family sales
C)Total product item sales
D)Sales at a given location

Question 36

What is the relationship between demand management and demand forecasting?

A)The two planning activities are managed independently.
B)Demand management plans are usually an input to demand forecasting.
C)Demand management is done by operations managers,while demand forecasting is done by marketing managers.
D)All the answers are correct.

Question 37

Using an exponential smoothing model,the forecast for next January's sales is:

A)150.0
B)477.3
C)450.0
D)Not enough information is given to make a forecast

Question 38

Use the data below. A company has forecasted next year's demand to be 400.What is the seasonally adjusted forecast for Quarter 1? (Choose the closest answer.)

A)75
B)71
C)125
D)73

Question 39

Zanda Corp.has been testing the performance of two different forecasting models to see which it should adopt for use.It wants to choose the model that has the smaller standard deviation of the forecast errors.Zanda should compare which of the following to make its choice?

A)MAD of the two models
B)MAPE of the two models
C)RMSE of the two models
D)MFE of the two models

Question 40

Which of the following statements most accurately describes the outcome of using a simple moving average model to forecast demand that has a strong trend?

A)Using more periods in the moving average calculation will produce better forecasts.
B)Moving average models require less historical data than exponential smoothing models.
C)Moving averages must be weighted in order to accurately predict a trend.
D)Changes in forecasts produced by a moving average model will lag behind changes in demand.

Question 41

Using the data shown below,the forecast for week 5 using an exponential smoothing model is:

A)164.1
B)146.1
C)200.1
D)Not enough information is given to produce a forecast

Question 42

Using the data shown below,the forecast for week 5 using a three-period moving average model is:

A)200
B)155
C)152
D)158

Question 43

Which of the following is not typically considered a component driver of demand?

A)Seasonality
B)Trend
C)Perturbation
D)Autocorrelation

Question 44

Demand planning for the intermediate term (tactical plans)would be done using dollar or unit sales for:

A)A business unit
B)An entire sales network
C)A product family in a region
D)A particular item at a given location

Question 45

The city of Dallas would like to control the amount of traffic on a major tollway.One way to manage the demand is by:

A)Rapid forecasting.
B)Dynamic pricing.
C)Signaling alternatives.
D)Opening and closing lanes.

Question 46

The table below shows quarterly sales data over four years.Using the average demand as the base,what is the seasonal index for the third quarter (Pick the answer that is closest to the correct number.)

A)0.92
B)0.82
C)0.99
D)1.20

Question 47

Given a demand of 19 for the most recent period,use α = .2 and β =.4 to create a trend-enhanced smoothing-based forecast.Assume that FIT₁ = 22 and T₁ = 7.83.The correct answer is closest to:

A)29.0
B)21.4
C)23.2
D)31.3

Question 48

The table below shows quarterly sales data over four years.A regression of sales on quarters yields this equation: Sales = 18.25 + 1.55 × Quarter number.Using the regression estimate as the base,what is the seasonal index for the fourth quarter? (Pick the answer that is closest to the correct number.)

A)1.10
B)1.23
C)1.04
D)0.81

Question 49

The data below show the forecasted probability of rain on Election Day and the actual number of people who voted in the election for each of the past eight years in a given city.If tomorrow is Election Day and the weather forecast shows a 50 percent chance of rain,how many voters do you expect to turn out?

A)28.3
B)20.0
C)17.4
D)75.2

Question 50

Increasing the value of alpha (α)in an exponential smoothing model would produce which of the following results?

A)Reduce the influence of more recent demands in computing future forecasts
B)Reduce the amount of data that needs to be stored to support the forecasting process
C)Increase the sensitivity of the forecast process to recent changes in demand
D)Reduce the ability of the forecast process to respond to seasonality in demand