Deck 11: Forecasting

Question 1

The last-value forecasting method requires a linear trend line.

Answer 1

False

Question 2

The mean square error is the square of the mean of the absolute deviations.

Answer 2

F ALSE

Question 3

A moving-average forecast tends to be more responsive to changes in the time-series data when more values are included in the average.

Answer 3

False

Question 4

The moving-average forecasting method assigns equal weights to each value that is represented by the average.

Question 5

The mean absolute deviation is the sum of the absolute value of forecasting errors divided by the number of forecasts.

Question 6

The seasonal factor for any period of a year measures how that period compares to the same period last year.

Question 7

Forecasts are rarely perfect.

Question 8

If significant changes in conditions are occurring relatively frequently,then a smaller smoothing constant is needed.

Question 9

The difference between a forecast and what turns out to be the true value is called the mean absolute deviation.

Question 10

Once accepted by managers,forecasts should not be overridden.

Question 11

The mean absolute deviation is more sensitive to large deviations than the mean square error.

Question 12

The last-value forecasting method is most useful when conditions are stable over time.

Question 13

A smoothing constant of 0.1 will cause an exponential smoothing forecast to react more quickly to a sudden change than a value of 0.3 will.

Question 14

The moving-average forecasting method is a very good one when conditions remain pretty much the same over the time period being considered.

Question 15

Removing the seasonal component from a time-series can be accomplished by dividing each value by its appropriate seasonal factor.

Question 16

The averaging method uses all the data points in the time-series.

Question 17

Exponential smoothing with trend was designed for time-series that have great variability both up and down.

Question 18

An advantage of the exponential smoothing forecasting method is that more recent experience is given more weight than less recent experience.

Question 19

Statistical models to forecast economic trends are called econometric models.

Question 20

Exponential smoothing with trend requires selection of two smoothing constants.

Question 21

Forecasts can help a manager to:

A)anticipate the future.
B)develop strategies.
C)make staffing decisions.
D)All of the above.
E)None of the above.

Question 22

The goal of time-series forecasting methods is to estimate the mean of the underlying probability distribution of the next value of the time-series as closely as possible.

Question 23

When statistical forecasting methods are used,it is no longer necessary to use judgmental methods as well.
Multiple Choice Questions

Question 24

Causal forecasting obtains a forecast for a dependent variable by relating it directly to one or more independent variables.

Question 25

In exponential smoothing,an $\alpha$ of 0.3 will cause a forecast to react more quickly to a large error than will an $\alpha$ of 0.2.

Question 26

If a time-series has exactly the same distribution for each and every time period,then the averaging forecasting method provides the best estimate of the mean.

Question 27

Figure
What is the last-value forecast for the next period?

A)58.
B)62.
C)60.
D)61.
E)None of the above.

Question 28

The last-value forecasting method:

A)is quick and easy to prepare.
B)is easy for users to understand.
C)ignores all values except one.
D)All of the above.
E)None of the above.

Question 29

The sales force composite method is a top-down approach to forecasting.

Question 30

Time-series data may exhibit which of the following behaviors?

A)Trend.
B)Seasonality.
C)Cycles.
D)Irregularities.
E)All of the above.

Question 31

Figure
What is the moving-average forecast for the next period based on the last three periods.

A)58.
B)62.
C)60.
D)61.
E)None of the above.

Question 32

Gradual,long-term movement in time-series values is called:

A)seasonal variation.
B)trend.
C)cycles.
D)irregular variation.
E)random variation.

Question 33

Judgmental forecasting methods have been developed to interpret statistical data.

Question 34

Using the latest value in a sequence of data to forecast the next period is:

A)a moving-average forecast.
B)a last-value forecast.
C)an exponentially smoothed forecast.
D)a causal forecast.
E)None of the above.

Question 35

In business,forecasts are the basis for:

A)sales planning.
B)inventory planning.
C)production planning.
D)budgeting.
E)All of the above.

Question 36

Which of the following are costs of an inaccurate forecast?

A)Lost sales.
B)Inventory.
C)An understaffed office.
D)Lower profits.
E)All of the above.

Question 37

The Delphi method involves the use of a series of questionnaires to achieve a consensus forecast.

Question 38

Forecasting techniques such as moving-average,exponential smoothing,and the last-value method all represent averaged values of time-series data.

Question 39

A time-series is said to be smooth if its underlying probability distribution usually remains the same from one period to the next.

Question 40

Linear regression can be used to approximate the relationship between independent and dependent variables.

Question 41

Figure
The president of State University wants to forecast student enrollment for this academic year based on the following historical data:
What is the forecast for this year using a moving-average forecast based on the last four years?

A)18,750.
B)19,500.
C)21,000.
D)22,650.
E)22,800.

Question 42

Figure
The president of State University wants to forecast student enrollment for this academic year based on the following historical data:
What is the forecast for this year using the last-value forecasting method?

A)18,750.
B)19,500.
C)21,000.
D)22,650.
E)22,800.

Question 43

Which of the following possible values of $\alpha$ would cause exponential smoothing to respond the most quickly to forecast errors?

A)0.
B)0.01.
C)0.05.
D)0.1.
E)0.15.

Question 44

Given forecast errors of 5,0,-4,and 3,what is the mean absolute deviation?

A)1.
B)2.
C)2.5.
D)3.
E)12.

Question 45

Given forecast errors of 4,8,and -3,what is the mean square error?

A)5
B)9
C)25
D)29.67
E)89

Question 46

Figure
The president of State University wants to forecast student enrollment for this academic year based on the following historical data:

-What is the forecast for this year using exponential smoothing with $\alpha$ = 0.5,if the forecast for two years ago was 16,000?

A)18,750.
B)19,500.
C)21,000.
D)22,650.
E)22,800.

Question 47

Given the following historical data,what is the moving-average forecast for period 6 based on the last three periods?

A)17.
B)18.
C)19.
D)20.
E)18.5.

Question 48

Given forecast errors of 4,8,and -3,what is the mean absolute deviation?

A)3.
B)4.
C)5.
D)6.
E)9.

Question 49

Given forecast errors of -5,-10,and 15,what is the mean absolute deviation?

A)0.
B)5.
C)10.
D)30.
E)None of the above.

Question 50

Figure
The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
What is the forecast for this year using a moving-average forecast based on the last three years?

A)163.
B)180.
C)300.
D)467.
E)510.

Question 51

Given an actual latest demand of 59,a previous forecast of 64,and $\alpha$ = 0.3,what would be the forecast for the next period using the exponential smoothing method?

A)36.9.
B)57.5.
C)60.5.
D)62.5.
E)65.5.

Question 52

Figure
The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
What is the forecast for this year using the last-value forecasting method?

A)163.
B)180.
C)300.
D)467.
E)510.

Question 53

The mean absolute deviation is used to:

A)estimate the trend line.
B)eliminate forecast errors.
C)measure forecast accuracy.
D)seasonally adjust the forecast.
E)All of the above.

Question 54

In exponential smoothing with trend,the forecast consists of:

A)an exponentially smoothed forecast and a smoothed trend factor.
B)the old forecast adjusted by a trend factor.
C)the old forecast and a smoothed trend factor.
D)a moving-average and a trend factor.
E)None of the above.

Question 55

In order to increase the responsiveness of a forecast made using the moving-average method,the number of values in the average should be:

A)decreased.
B)increased.
C)multiplied by a larger $\alpha$
D)multiplied by a smaller $\alpha$
E)None of the above.

Question 56

Given forecast errors of 5,0,-4,and 3,what is the mean square error?

A)3.
B)4.
C)12.
D)12.5.
E)50.

Question 57

Given an actual latest demand of 105,a previous forecast of 97,and $\alpha$ = 0.4,what would be the forecast for the next period using the exponential smoothing method?

A)80.8.
B)93.8.
C)100.2.
D)101.8.
E)108.2.

Question 58

Given the following historical data,what is the moving-average forecast for period 6 based on the last three periods?

A)67.
B)68.
C)69.
D)100.
E)115.

Question 59

Figure
The president of State University wants to forecast student enrollment for this academic year based on the following historical data:

-What is the forecast for this year using exponential smoothing with trend if \9\alpha\) = 0.5 and $\alpha$ = 0.3? Assume the forecast for last year was 21,000 and the forecast for two years ago was 19,000,and that the trend estimate for last years forecast was 1,500.

A)18,750.
B)19,500.
C)21,000.
D)22,650.
E)22,800.

Question 60

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a last-value forecast?

A)0.
B)0.01.
C)0.1.
D)0.5.
E)1.

Question 61

The previous trend line has predicted 18,500 for two years ago,and 19,700 for last year.What was the mean absolute deviation for these forecasts?

A)100.
B)200.
C)400.
D)500.
E)800.

Question 62

Figure
An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:
What is the forecast for this year using a moving-average forecast based on the last four years?

A)22,000.
B)20,000.
C)18,000.
D)15,000.
E)12,000.

Question 63

Which of the following would be an advantage of using a sales force composite to develop a demand forecast?

A)The sales staff is least affected by changing customer needs.
B)The sales force can easily distinguish between customer desires and probable actions.
C)The sales staff is often aware of customer's future plans.
D)Salespeople are least likely to be biased by sales quotas.
E)None of the above.

Question 64

Figure
Professor Z needs to allocate time among several tasks next week to include time for students' appointments.Thus,he needs to forecast the number of students who will seek appointments.He has gathered the following data:

-What is the forecast for this year using exponential smoothing with $\alpha$ = 0.2,if the forecast for two weeks ago was 90?

A)49.
B)50.
C)52.
D)65.
E)78.

Question 65

Which of the following is not a type of judgmental forecasting?

A)Managerial opinion.
B)Sales force composite.
C)Time-series analysis.
D)The Delphi method.
E)Consumer market survey.

Question 66

Figure
Professor Z needs to allocate time among several tasks next week to include time for students' appointments.Thus,he needs to forecast the number of students who will seek appointments.He has gathered the following data:

-What is the forecast for this year using exponential smoothing with trend if $\alpha$ = 0.5 and $\alpha$ = 0.1? Assume the forecast for last week was 65 and the forecast for two weeks ago was 75,and that the trend estimate for last years forecast was -5.

A)49.
B)50.
C)52.
D)65.
E)78.

Question 67

Figure
Professor Z needs to allocate time among several tasks next week to include time for students' appointments.Thus,he needs to forecast the number of students who will seek appointments.He has gathered the following data:
What is the forecast for this year using the last-value forecasting method?

A)49.
B)50.
C)52.
D)65.
E)78.

Question 68

Which of the following would be considered a possible drawback of using executive opinions to develop a forecast?

A)It is difficult to interpret the results.
B)Responsibility is diffused for the forecast.
C)Extensive use of computers is needed.
D)It brings together the knowledge of top managers.
E)Forecasters are sometimes overly influenced by recent events.

Question 69

The primary method for causal forecasting is:

A)sensitivity analysis.
B)linear regression.
C)moving-average.
D)exponential smoothing.
E)the Delphi method.

Question 70

Figure
An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:

-What is the forecast for this year using exponential smoothing with $\alpha$ = 0.2,if the forecast for last year was 15,000?

A)20,000.
B)19,000.
C)17,500.
D)16,000.
E)15,000.

Question 71

A manager uses the equation y = 40,000 + 150x to predict monthly receipts.What is the forecast for July if x = 0 in April?

A)40,450.
B)40,600.
C)42,100.
D)42,250.
E)42,400.

Question 72

The equation y = 350 - 2.5x is used to predict quarterly demand where x = 0 in the second quarter of last year.Quarterly seasonal factors are Q1 = 1.5,Q2 = 0.8,Q3 = 1.1,and Q4 = 0.6.What is the forecast for the last quarter of this year?

A)199.5.
B)201.
C)266.
D)268.
E)335.

Question 73

Figure
An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:
What is the forecast for this year using the last-value forecasting method?

A)22,000.
B)20,000.
C)18,000.
D)15,000.
E)12,000.

Question 74

The forecasting method which uses anonymous questionnaires to achieve a consensus forecast is:

A)sales force composites.
B)consumer surveys.
C)the Delphi method.
D)time-series analysis.
E)executive opinions.

Question 75

Figure
The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:

-What is the forecast for this year using exponential smoothing with $\alpha$ = 0.4,if the forecast for two years ago was 750?

A)163.
B)180.
C)300.
D)467.
E)510.

Question 76

Figure
Professor Z needs to allocate time among several tasks next week to include time for students' appointments.Thus,he needs to forecast the number of students who will seek appointments.He has gathered the following data:
What is the forecast for this year using a moving-average forecast based on the last three weeks?

A)49.
B)50.
C)52.
D)65.
E)78.