Deck 15: Demand Management and Forecasting

Question 1

There is not much that a firm can do to influence independent demand.

Answer 1

False

Question 2

Cyclical influences on demand are often expressed graphically as a linear function that is either upward or downward sloping.

Answer 2

False

Question 3

Trend lines are usually the last things considered when developing a forecast.

Answer 3

False

Question 4

In the weighted moving average forecasting model the weights must add up to one times the number of data points.

Question 5

The value of the smoothing constant alpha in an exponential smoothing model is between 0 and 1.

Question 6

The equation for exponential smoothing states that the new forecast is equal to the old forecast plus the error of the old forecast.

Question 7

Experience and trial and error are the simplest ways to choose weights for the weighted moving average forecasting model.

Question 8

Independent demand is the demand for a product or service caused by the demand for other products or services.

Question 9

Baysean analysis is the simplest way to choose weights for the weighted moving average forecasting model.

Question 10

Continual review and updating in light of new data is a forecasting technique called second-guessing.

Question 11

A central premise of exponential smoothing is that more recent data is less indicative of the future than data from the distant past.

Question 12

In exponential smoothing, it is desirable to use a higher smoothing constant when forecasting demand for a product experiencing high growth.

Question 13

In a forecasting model using simple exponential smoothing the data pattern should remain stationary.

Question 14

Simple exponential smoothing lags changes in demand.

Question 15

Cyclical influences on demand may come from occurrences such as political elections, war or economic conditions.

Question 16

Time series forecasting models make predictions about the future based on analysis of past data.

Question 17

The weighted moving average forecasting model uses a weighting scheme to modify the effects of individual data points.This is its major advantage over the simple moving average model.

Question 18

Exponential smoothing is always the most accurate of all forecasting models.

Question 19

In the simple exponential smoothing forecasting model you need at least 30 observations to set the tracking alpha.

Question 20

In a forecasting model using simple moving average the shorter the time span used for calculating the moving average, the closer the average follows volatile trends.

Question 21

RSFE in forecasting stands for "running sum of forecast errors."

Question 22

Linear regression is not useful for aggregate planning.

Question 23

Random errors in forecasting occur when an undetected secular trend is not included in a forecasting model.

Question 24

RSFE in forecasting stands for "reliable safety function error."

Question 25

Qualitative forecasting techniques generally take advantage of the knowledge of experts and therefore do not require much judgment.

Question 26

Random errors can be defined as those that cannot be explained by the forecast model being used.

Question 27

For every forecasting problem there is one best forecasting technique.

Question 28

MAD statistics can be used to generate tracking signals.

Question 29

Market research is a quantitative method of forecasting.

Question 30

Regression is a functional relationship between two or more correlated variables, where one variable is used to predict another.

Question 31

A tracking signal (TS) can be calculated using the arithmetic sum of forecast deviations divided by the
MAD.

Question 32

In causal relationship forecasting leading indicators are used to forecast occurrences.

Question 33

Because the factors governing demand for products are very complex, all forecasts of demand contain some error.

Question 34

Multiple regression analysis uses several regression models to generate a forecast.

Question 35

When forecast errors occur in a normally distributed pattern, the ratio of the mean absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1 standard deviation.

Question 36

Exponential smoothing forecasts always lag behind the actual occurrence but can be corrected somewhat with a trend adjustment.

Question 37

A good forecaster is one who develops special skills and experience at one forecasting technique and is capable of applying it to widely diverse situations.

Question 38

There are no differences in strategic and tactical forecasting.A forecast is a mathematical projection and its ultimate purpose should make no difference to the analyst.

Question 39

A restriction in using linear regression is that it assumes that past data and future projections fall on or near a straight line.

Question 40

The standard error of the estimate of a linear regression is not useful for judging the fit between the data and the regression line when doing forecasts.

Question 41

In business forecasting, what is usually considered a long-term time period?

A)Three months or longer
B)Six months or longer
C)One year or longer
D)Two years or longer
E)Ten years or longer

Question 42

Which of the following forecasting methodologies is considered a time series forecasting technique?

A)Delphi method
B)Exponential averaging
C)Simple movement smoothing
D)Weighted moving average
E)Simulation

Question 43

Which of the following forecasting methods is very dependent on selection of the right individuals who will judgmentally be used to actually generate the forecast?

A)Time series analysis
B)Simple moving average
C)Weighted moving average
D)Delphi method
E)Panel consensus

Question 44

Which of the following forecasting methodologies is considered a time series forecasting technique?

A)Simple moving average
B)Market research
C)Leading indicators
D)Historical analogy
E)Simulation

Question 45

In business forecasting, what is usually considered a medium-term time period?

A)Six weeks to one year
B)Three months to two years
C)One to five years
D)One to six months
E)Six months to six years

Question 46

In time series data depicting demand which of the following is not considered a component of demand variation?

A)Trend
B)Seasonal
C)Cyclical
D)Variance
E)Autocorrelation

Question 47

Which of the following forecasting methods uses executive judgment as its primary component for forecasting?

A)Historical analogy
B)Time series analysis
C)Panel consensus
D)Market research
E)Linear regression

Question 48

A time series is defined in the text as chronologically ordered data that may contain one or more components of demand variation: trend, seasonal, cyclical, autocorrelation, and random.

Question 49

It is difficult to identify the trend in time series data.

Question 50

In general, which forecasting time frame compensates most effectively for random variation and short term changes?

A)Short-term forecasts
B)Quick-time forecasts
C)Long range forecasts
D)Medium term forecasts
E)Rapid change forecasts

Question 51

Which of the following forecasting methodologies is considered a qualitative forecasting technique?

A)Simple moving average
B)Market research
C)Linear regression
D)Exponential smoothing
E)Multiple regression

Question 52

In most cases, demand for products or services can be broken down into several components.Which of the following is not considered a component of demand?

A)Average demand for a period
B)A trend
C)Seasonal elements
D)Past data
E)Autocorrelation

Question 53

In decomposition of time series data it is relatively easy identify cycles and autocorrelation components.

Question 54

In most cases, demand for products or services can be broken into several components.Which of the following is considered a component of demand?

A)Cyclical elements
B)Future demand
C)Past demand
D)Inconsistent demand
E)Level demand

Question 55

In business forecasting, what is usually considered a short-term time period?

A)Four weeks or less
B)More than three months
C)Six months or more
D)Less than three months
E)One year

Question 56

Which of the following forecasting methodologies is considered a causal forecasting technique?

A)Exponential smoothing
B)Weighted moving average
C)Linear regression
D)Historical analogy
E)Market research

Question 57

In most cases, demand for products or services can be broken into several components.Which of the following is considered a component of demand?

A)Forecast error
B)Autocorrelation
C)Previous demand
D)Consistent demand
E)Repeat demand

Question 58

We usually associate the word "seasonal" with recurrent periods of repetitive activity that happen on other than an annual cycle.

Question 59

Decomposition of a time series means identifying and separating the time series data into its components.

Question 60

Which of the following is not one of the basic types of forecasting?

A)Qualitative
B)Time series analysis
C)Causal relationships
D)Simulation
E)Force field analysis

Question 61

If a firm produced a standard item with relatively stable demand, the smoothing constant alpha used in an exponential smoothing forecasting model would tend to be in which of the following ranges?

A)5 % to 10 %
B)20 % to 50 %
C)20 % to 80 %
D)60 % to 120 %
E)90 % to 100 %

Question 62

Which two of the following are among the major reasons that exponential smoothing has become well accepted as a forecasting technique?

A)Accuracy
B)Sophistication of analysis
C)Predicts turning points
D)Ease of use
E)Ability to Forecast lagging data trends

Question 63

A company wants to forecast demand using the weighted moving average.If the company uses three prior yearly sales values , and we want to weight year 2010 at 30%, year 2011 at 30% and year 2012 at 40%, which of the following is the weighted moving average forecast for year 2013?

A)170
B)168
C)158
D)152
E)146

Question 64

If a firm produced a product that is experiencing growth in demand, the smoothing constant alpha used in an exponential smoothing forecasting model would tend to be which of the following?

A)Close to zero
B)A very low percentage, less than 10%
C)The more rapid the growth, the higher the percentage
D)The more rapid the growth, the lower the percentage
E)50 % or more

Question 65

A company wants to forecast demand using the simple moving average.If the company uses three prior yearly sales values , which of the following is the simple moving average forecast for year 2012?

A)100.5
B)122.5
C)133.3
D)135.6
E)139.3

Question 66

The exponential smoothing method requires which of the following data to forecast the future?

A)The most recent forecast
B)Precise actual demand for the past several years
C)The value of the smoothing constant delta
D)Overall industry demand data
E)Tracking values

Question 67

A company wants to generate a forecast for unit demand for year 2012 using exponential smoothing.The actual demand in year 2011 was 120.The forecast demand in year 2011 was 110.Using this data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2012 forecast value?

A)100
B)110
C)111
D)114
E)120

Question 68

Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value?

A)1,000
B)1,030
C)1,070
D)1,130
E)970

Question 69

Given a prior forecast demand value of 230, a related actual demand value of 250, and a smoothing constant alpha of 0.1, what is the exponential smoothing forecast value for the following period?

A)230
B)232
C)238
D)248
E)250

Question 70

Which of the following forecasting methods can be used for short-term forecasting?

A)Simple exponential smoothing
B)Delphi technique
C)Market research
D)Hoskins-Hamilton smoothing
E)Serial regression

Question 71

A company wants to forecast demand using the simple moving average.If the company uses four prior yearly sales values , which of the following is the simple moving average forecast for year 2012?

A)100.5
B)140.0
C)142.5
D)145.5
E)155.0

Question 72

In general, which forecasting time frame is best to detect general trends?

A)Short-term forecasts
B)Quick-time forecasts
C)Long range forecasts
D)Medium term forecasts
E)Rapid change forecasts

Question 73

Which of the following considerations is not a factor in deciding which forecasting model a firm should choose?

A)Time horizon to forecast
B)Product
C)Accuracy required
D)Data availability
E)Analyst availability

Question 74

In general, which forecasting time frame best identifies seasonal effects?

A)Short-term forecasts
B)Quick-time forecasts
C)Long range forecasts
D)Medium term forecasts
E)Rapid change forecasts

Question 75

A company wants to forecast demand using the weighted moving average.If the company uses two prior yearly sales values , and we want to weight year 2011 at 10% and year 2012 at 90%, which of the following is the weighted moving average forecast for year 2013?

A)120
B)128
C)133
D)138
E)142