Deck 4: Forecasting Demand

Question 1

Forecasts may be influenced by a product's position in its life cycle.

Answer 1

True

Question 2

What forecasting systems combine the intelligence of multiple supply chain partners?

A)FORE
B)MULTISUP
C)CPFR
D)SUPPLY
E)MSCP

Answer 2

CPFR

Question 3

As compared to long-range forecasts,short-range forecasts:

A)are less accurate.
B)deal with less comprehensive issues supporting management decisions.
C)employ similar methodologies.
D)all of the above
E)none of the above

Answer 3

deal with less comprehensive issues supporting management decisions.

Question 4

________ forecasts are concerned with rates of technological progress,which can result in the birth of exciting new products,requiring new plants and equipment.

Question 5

A skeptical manager asks what long-range forecasts can be used for.Give her three possible uses/purposes.

Question 6

One use of short-range forecasts is to determine:

A)planning for new products.
B)capital expenditures.
C)research and development plans.
D)facility location.
E)job assignments.

Question 7

Forecasts of individual products tend to be more accurate than forecasts of product families.

Question 8

Describe the three forecasting time horizons and their use.

Question 9

A forecast with a time horizon of about 3 months to 3 years is typically called a:

A)long-range forecast.
B)medium-range forecast.
C)short-range forecast.
D)weather forecast.
E)strategic forecast.

Question 10

Which of the following most requires long-range forecasting (as opposed to short-range or medium-range forecasting)for its planning purposes?

A)job scheduling
B)production levels
C)cash budgeting
D)capital expenditures
E)purchasing

Question 11

Short-range forecasts tends to ________ longer-range forecasts.

A)be less accurate than
B)be more accurate than
C)have about the same level of accuracy as
D)employ the same methodologies as
E)deal with more comprehensive issues than

Question 12

Forecasts used for new product planning,capital expenditures,facility location or expansion,and R&D typically utilize a:

A)short-range time horizon.
B)medium-range time horizon.
C)long-range time horizon.
D)naive method,because there is no data history.
E)trend extrapolation.

Question 13

A skeptical manager asks what short-range forecasts can be used for.Give her three possible uses/purposes.

Question 14

The three major types of forecasts used by organizations in planning future operations are:

A)strategic,tactical,and operational.
B)economic,technological,and demand.
C)exponential smoothing,Delphi,and regression.
D)causal,time-series,and seasonal.
E)departmental,organizational,and territorial.

Question 15

List and briefly describe the three major types of forecasts that organizations use in planning future operations.

Question 16

Demand forecasts serve as inputs to financial,marketing,and personnel planning.

Question 17

________ forecasts address the business cycle by predicting inflation rates,money supplies,housing starts,and other planning indicators.

Question 18

Forecasts are usually classified by time horizon into which three categories?

A)short-range,medium-range,and long-range
B)finance/accounting,marketing,and operations
C)strategic,tactical,and operational
D)exponential smoothing,regression,and time series
E)departmental,organizational,and industrial

Question 19

What two numbers are contained in the daily report to the CEO of Walt Disney Parks & Resorts regarding the six Orlando parks?

A)yesterday's forecasted attendance and yesterday's actual attendance
B)yesterday's actual attendance and today's forecasted attendance
C)yesterday's forecasted attendance and today's forecasted attendance
D)yesterday's actual attendance and last year's actual attendance
E)yesterday's forecasted attendance and the year-to-date average daily forecast error

Question 20

Most forecasting techniques assume that there is some underlying stability in the system.

Question 21

________ forecasts employ one or more mathematical models that rely on historical data and/or associative variables to forecast demand.

Question 22

What are the differences between quantitative and qualitative forecasting methods?

Question 23

________ forecasts use a series of past data points to make a forecast.

Question 24

________ is a forecasting technique based upon salespersons' estimates of expected sales.

Question 25

Which of the following is NOT a step in the forecasting process?

A)Determine the use of the forecast.
B)Eliminate any assumptions.
C)Determine the time horizon of the forecast.
D)Select the forecasting model.
E)Validate and implement the results.

Question 26

What are the three realities of forecasting that companies face?

Question 27

Which of the following uses three types of participants: decision makers,staff personnel,and respondents?

A)jury of executive opinion
B)sales force composite
C)Delphi method
D)associative models
E)time series

Question 28

Identify the seven steps involved in forecasting.

Question 29

Which of the following techniques uses variables such as price and promotional expenditures,which are related to product demand,to predict demand?

A)associative models
B)exponential smoothing
C)weighted moving average
D)moving average
E)trend projection

Question 30

What is the difference between an associative model and a time-series model?

Question 31

Name and discuss three qualitative forecasting methods.

Question 32

Identify four quantitative forecasting methods.

Question 33

The sales force composite forecasting method relies on salespersons' estimates of expected sales.

Question 34

A naïve forecast for September sales of a product would be equal to the forecast for August.

Question 35

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

A)jury of executive opinion
B)sales force composite
C)market survey
D)Delphi method
E)moving average

Question 36

The quarterly "make meeting" of Lexus dealers is an example of a sales force composite forecast.

Question 37

The forecasting technique that pools the opinions of a group of experts or managers is known as:

A)the expert judgment model.
B)multiple regression.
C)jury of executive opinion.
D)market survey.
E)management coefficients.

Question 38

What is a time-series forecasting model?

Question 39

The two general approaches to forecasting are:

A)qualitative and quantitative.
B)mathematical and statistical.
C)judgmental and qualitative.
D)historical and associative.
E)judgmental and associative.

Question 40

A time-series model uses a series of past data points to make the forecast.

Question 41

A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y per period.

Question 42

Cycles and random variations are both components of time series.

Question 43

In time series,which of the following cannot be predicted?

A)large increases in demand
B)cycles
C)seasonal fluctuations
D)random variations
E)large decreases in demand

Question 44

Mean squared error and exponential smoothing are two measures of the overall error of a forecasting model.

Question 45

What is the forecast for May using a four-month moving average?

A)38
B)42
C)43
D)44
E)47

Question 46

Which of the following statements about time-series forecasting is true?

A)It is always based on the assumption that future demand will be the same as past demand.
B)It makes extensive use of the data collected in the qualitative approach.
C)It is based on the assumption that the analysis of past demand helps predict future demand.
D)Because it accounts for trends,cycles,and seasonal patterns,it is always more powerful than associative forecasting.
E)All of the above are true.

Question 47

Which time-series model below assumes that demand in the next period will be equal to the most recent period's demand?

A)naïve approach
B)moving average approach
C)weighted moving average approach
D)exponential smoothing approach
E)trend projection

Question 48

One advantage of exponential smoothing is the limited amount of record keeping involved.

Question 49

In trend projection,a negative regression slope is mathematically impossible.

Question 50

The larger the number of periods in the simple moving average forecasting method,the greater the method's responsiveness to changes in demand.

Question 51

A naïve forecast for September sales of a product would be equal to the sales in August.

Question 52

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

A)trend
B)random variations
C)seasonality
D)cycles
E)They may exhibit all of the above.

Question 53

Seasonal indices adjust raw data for patterns that repeat at regular time intervals.

Question 54

John's House of Pancakes uses a weighted moving average method to forecast pancake sales.It assigns a weight of 5 to the previous month's demand,3 to demand two months ago,and 1 to demand three months ago.If sales amounted to 1000 pancakes in May,2200 pancakes in June,and 3000 pancakes in July,what should be the forecast for August?

A)2400
B)2511
C)2067
D)3767
E)1622

Question 55

The fundamental difference between cycles and seasonality is the:

A)duration of the repeating patterns.
B)magnitude of the variation.
C)ability to attribute the pattern to a cause.
D)all of the above
E)none of the above

Question 56

Which of the following is not present in a time series?

A)seasonality
B)operational variations
C)trend
D)cycles
E)random variations

Question 57

Demand for individual products can be driven by product life cycles.

Question 58

In trend projection,the trend component is the slope of the regression equation.

Question 59

Gradual upward or downward movement of data over time is called:

A)seasonality.
B)a cycle.
C)a trend.
D)exponential variation.
E)random variation.

Question 60

A six-month moving average forecast is generally better than a three-month moving average forecast if demand:

A)is rather stable.
B)has been changing due to recent promotional efforts.
C)follows a downward trend.
D)exceeds one million units per year.
E)follows an upward trend.

Question 61

Which of the following statements comparing exponential smoothing to the weighted moving average technique is TRUE?

A)Exponential smoothing is more easily used in combination with the Delphi method.
B)More emphasis can be placed on recent values using the weighted moving average.
C)Exponential smoothing is considerably more difficult to implement on a computer.
D)Exponential smoothing typically requires less record keeping of past data.
E)Exponential smoothing allows one to develop forecasts for multiple periods,whereas the weighted moving average technique does not.

Question 62

Given forecast errors of -1,4,8,and -3,what is the mean absolute deviation?

A)2
B)3
C)4
D)8
E)16

Question 63

A seasonal index for a monthly series is about to be calculated on the basis of three years' accumulation of data.The three previous July values were 110,150,and 130.The average demand over all months during the three-year time period was 190 .What is the approximate seasonal index for July?

A)0.487
B)0.684
C)1.462
D)2.053
E)cannot be calculated with the information given

Question 64

Demand for a certain product is forecast to be 800 units per month,averaged over all 12 months of the year.The product follows a seasonal pattern,for which the January monthly index is 1.25.What is the seasonally-adjusted sales forecast for January?

A)640 units
B)798.75 units
C)801.25 units
D)1000 units
E)83.33 units

Question 65

Which time-series model uses BOTH past forecasts and past demand data to generate a new forecast?

A)naïve
B)moving average
C)weighted moving average
D)exponential smoothing
E)trend projection

Question 66

For a given product demand,the time-series trend equation is 53 - 4x.The negative sign on the slope of the equation:

A)is a mathematical impossibility.
B)is an indication that the forecast is biased,with forecast values lower than actual values.
C)is an indication that product demand is declining.
D)implies that the coefficient of determination will also be negative.
E)implies that the cumulative error will be negative.

Question 67

Which of the following is TRUE regarding the two smoothing constants of the Forecast Including Trend (FIT)model?

A)One constant is positive,while the other is negative.
B)They are called MAD and cumulative error.
C)Alpha is always smaller than beta.
D)One constant smoothes the regression intercept,whereas the other smoothes the regression slope.
E)Their values are determined independently.

Question 68

Given an actual demand this period of 61,a forecast for this period of 58,and an alpha of 0.3,what would the forecast for the next period be using exponential smoothing?

A)45.5
B)57.1
C)58.9
D)61.0
E)65.5

Question 69

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

A)0
B)1 divided by the number of periods
C)0.5
D)1.0
E)cannot be determined

Question 70

Suppose that the last four months of sales were 8,10,15,and 9 units,respectively.Suppose further that the last four forecasts were 5,6,11,and 12 units,respectively.What is the Mean Absolute Deviation (MAD)of these forecasts?

A)2
B)-10
C)3.5
D)9
E)10.5

Question 71

Which of the following values of alpha would cause exponential smoothing to respond the SLOWEST to forecast errors?

A)0.10
B)0.2246
C)0.50
D)0.90
E)cannot be determined

Question 72

Suppose that the demand in period 1 was 7 units and the demand in period 2 was 9 units.Assume that the forecast for period 1 was for 5 units.If the firm uses exponential smoothing with an alpha value of .20,what should be the forecast for period 3? (Round answers to two decimal places. )

A)9.00
B)3.72
C)9.48
D)5.00
E)6.12

Question 73

The primary purpose of the mean absolute deviation (MAD)in forecasting is to:

A)estimate the trend line.
B)eliminate forecast errors.
C)measure forecast accuracy.
D)seasonally adjust the forecast.
E)remove random variations.

Question 74

Increasing the number of periods in a moving average will accomplish greater smoothing,but at the expense of:

A)manager understanding.
B)accuracy.
C)stability.
D)sensitivity to real changes in the data.
E)All of the above are diminished when the number of periods increases.

Question 75

A time-series trend equation is 25.3 + 2.1x.What is your forecast for period 7?

A)23.2
B)25.3
C)27.4
D)40.0
E)179.2

Question 76

Which of the following is NOT a characteristic of exponential smoothing?

A)smoothes random variations in the data
B)uses an easily altered weighting scheme
C)weights each historical value equally
D)has minimal data storage requirements
E)uses the previous period's forecast

Question 77

Yamaha manufactures which set of products with complementary demands to address seasonal variations?

A)golf clubs and skis
B)swimming suits and winter jackets
C)jet skis and snowmobiles
D)pianos and guitars
E)ice skates and water skis

Question 78

A forecasting method has produced the following over the past five months.What is the mean absolute deviation?

A)-0.2
B)-1.0
C)0.0
D)1.2
E)8.6

Question 79

Given an actual demand this period of 103,a forecast value for this period of 99,and an alpha of .4,what is the exponential smoothing forecast for next period?

A)94.6
B)97.4
C)100.6
D)101.6
E)103.0

Question 80

A forecast based on the previous forecast plus a percentage of the forecast error is a(n):

A)qualitative forecast.
B)naive forecast.
C)moving average forecast.
D)weighted moving average forecast.
E)exponential smoothing forecast.