Deck 10: Forecasting

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

Exponential smoothing with trend requires selection of two smoothing constants

Question 5

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 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

Forecasts are rarely perfect

Question 11

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

Question 12

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

Question 13

The last-value forecasting method requires a linear trend line

Question 14

Once accepted by managers,forecasts should not be overridden

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

Statistical models to forecast economic trends are called econometric models

Question 20

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

Question 21

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

Question 22

Period : Demand
1 :58
2 :59
3 :60
4 :61
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 23

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

Question 24

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 25

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

Question 26

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

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

Question 27

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 28

Judgmental forecasting methods have been developed to interpret statistical data

Question 29

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

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

Question 30

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 31

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 32

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 33

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

Question 34

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

Question 35

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

Question 36

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 37

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

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

Question 38

In business,forecasts are the basis for:

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

Question 39

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

Question 40

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 41

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 42

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 43

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 44

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 45

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 46

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 47

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 48

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 49

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 50

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 51

The president of State University wants to forecast student enrollment for this academic year based on the following historical data:
Year :Enrollments
5 years ago :15,000
4 years ago :16,000
3 years ago :18,000
2 years ago :20,000
Last year :21,000

-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 52

The president of State University wants to forecast student enrollment for this academic year based on the following historical data:
Year :Enrollments
5 years ago :15,000
4 years ago :16,000
3 years ago :18,000
2 years ago :20,000
Last year :21,000
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

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 54

The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
Time Period :Demand
5 years ago :900
4 years ago : 700
3 years ago : 600
2 years ago :500
Last year :300
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 55

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 56

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 57

The president of State University wants to forecast student enrollment for this academic year based on the following historical data:
Year :Enrollments
5 years ago :15,000
4 years ago :16,000
3 years ago :18,000
2 years ago :20,000
Last year :21,000
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 58

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 59

The president of State University wants to forecast student enrollment for this academic year based on the following historical data:
Year :Enrollments
5 years ago :15,000
4 years ago :16,000
3 years ago :18,000
2 years ago :20,000
Last year :21,000

-What is the forecast for this year using exponential smoothing with trend if $\alpha$ = 0 5 and $\beta$ = 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

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 61

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:
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50

-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 62

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:
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50
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 63

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 64

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 65

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 66

Questions 10-66 through 10-69 refer to the following:
An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:
Year # sold
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
Last year 20,000

-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 67

The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
Time Period :Demand
5 years ago :900
4 years ago : 700
3 years ago : 600
2 years ago :500
Last year :300
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

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:
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50
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

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

The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
Time Period :Demand
5 years ago :900
4 years ago : 700
3 years ago : 600
2 years ago :500
Last year :300

-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 71

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 72

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 73

Questions 10-66 through 10-69 refer to the following:
An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:
Year # sold
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
Last year 20,000
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 74

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 75

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:
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50

-What is the forecast for this year using exponential smoothing with trend if $\alpha$ = 0 5 and $\beta$ = 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 76

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