Deck 12: Demand Planning: Forecasting and Demand Management

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)?

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

Answer 1

44

Question 2

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

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

Answer 2

Negative.

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)?

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

Answer 3

5.6 units/period

Question 4

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 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

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?

A)$256,667
B)$246,667
C)$255,000
D)$232,124

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?

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

Question 8

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 of the above.

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?

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

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?

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

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)?

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

Question 12

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 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?

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

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)?

A)200
B)225
C)-66.67
D)1200

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?

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

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

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?

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

Question 18

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 of the above.

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:

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

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?

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

Question 21

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 22

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 above statements are true.

Question 23

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)Both B and C are correct.

Question 24

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 25

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 very strong positive bias.
D)I'm sorry, but there is a slight positive bias.

Question 26

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 27

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 28

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 29

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 30

Using the data below, determine the MAPE.

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

Question 31

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 32

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 33

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 of the above.

Question 34

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 of the above.

Question 35

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