Chapter 9 SCM 304
Multiple regression is used when the forecaster believes that more than one independent variable should be used to predict the variable of interest.
T
Over the long run, fluctuations in demand due to seasonality are greater than those due to randomness.
T
The Delphi method, panel consensus forecasting, and market surveys are all qualitative methods, but only market surveys do not use experts.
T
The forecast data matches the actual data perfectly if the mean absolute deviation is 0.0.
T
The greater the randomness in the model, the greater the number of periods should be used in a moving average forecast.
T
Dividing actual demand by the model's forecast yields an index that can be used to adjust for ________ in the data.
seasonality
A model with a positive mean forecast error suggests that, on average, the model underforecasts
T
A seasonal index less than 1.0 means that the model is overforecasted.
T
Exponential smoothing with an alpha of one will yield identical results to a last period actual demand.
T
Forecasts are almost always wrong.
T
A tracking signal value between ________ and ________ would suggest that the forecasting technique in use is appropriate.
-4, +4
A company keeps track of unit sales and notes a strong trend during the past eight periods. They use an adjusted exponential smoothing model with an alpha equal to 0.7 and a beta equal to 0.6. Using the demand data and previous forecasts shown in the table, develop a forecast for period 4. Week # Units Unadjusted Forecast Trend Adjusted Forecast 1 68 65.0 0.0 65.0 2 72 67.1 1.3 68.4 3 80 4 93 5 108 6 121 7 125 8 139 A) 82.2 B) 84.9 C) 87.5 D) 91.6
A
A forecaster develops a linear regression model for quarterly sales data shown in the table. The slope of the regression equation is 37.9 and the intercept is 57. Use the regression model to determine the seasonal index for the third quarter. Quarter Sales 1 94 2 150 3 159 4 228 1 90 2 126 3 179 4 188 A) 0.99 B) 1.12 C) 0.93 D) 1.09
A
A well-educated lumberjack decides to use linear regression to predict the demand for firewood based on the ambient temperature. He has collected data on firewood sales and temperature for the last several days and has performed some preliminary calculations as shown in the table. What is his regression equation based on the data? Temp Ricks Temp Squared Temp∗# Ricks 33 17 1089 561 19 32 361 608 34 20 1156 680 34 18 1156 612 20 33 400 660 24 30 576 720 17 34 289 578 30 25 900 750 38 16 1444 608 23 29 529 667 Sums 272 254 7900 6444 A) Ricks = 50.6 - 0.93 x Temp B) Temp = 53.3 — 1.0 x Ricks C) Ricks = 0.93 - 50.6 x Temp D) Temp = 1.0 — 53.3 x Ricks
A
Use a three period weighted moving average with Wt = 0.7, Wt-1 = 0.2, and Wt-2 = 0.1 to forecast demand for July. A) 235.2 B) 195.6 C) 158.8 D) 180.4
A
Which of these forecasts is the BEST? A) The one with a MAD of zero. B) The one with the tracking signal of +4. C) The one with the tracking signal of -4. D) The one where the tracking signal times the MAD equals zero.
A
Which of these quantitative techniques is a causal model? A) linear regression B) last period C) exponential smoothing D) weighted moving average
A
A drive-in restaurant has experienced the following customer loads on the past 8 Friday nights. If their forecast for period 7 was 59 customers, then what is their forecast for period number 9 using a smoothing constant of 0.7? Friday # Customers 1 49 2 55 3 57 4 59 5 56 6 61 7 62 8 63 A) 61.10 B) 62.43 C) 59.90 D) 60.83
B
A long-term movement up or down in a time series is called: A) seasonality. B) trend. C) randomness. D) cycle.
B
A video game publishing company needs to predict the total sales in the European market for the next year. This is an example of a(n): A) firm-level demand forecast. B) overall market demand forecast. C) supply forecast. D) price forecast.
B
Heidi favors using a two period moving average but Tim is "an exponential-smoothing man." Tim's demand forecast for May was identical to Heidi's. What value of alpha would Tim need to use in order for his June forecast to be identical to Heidi's if each sticks with their preferred technique? A) .085 B) .196 C) .237 D) .348
B
Which of the following statements regarding collaborative planning, forecasting, and replenishment (CPFR) systems is BEST? A) In CPFR, each business develops a sales and operations plan and the mainframe system reconciles these plans to find a middle ground that all businesses work towards. B) CPFR is a set of business processes. C) CPFR has the Project Management Body of Knowledge (PMBOK©) as its basis. D) Recent studies have demonstrated that manual, paper-based CPFR systems are more responsive and more accurate than computer-based CPFR systems.
B
A qualitative forecasting technique well-suited for demand forecasts of a new product or service is the: A) Delphi method. B) build-up forecast. C) life cycle analogy method. D) market survey.
C
A firm's demand data from the last two quarters is displayed in the table. Month Demand January 154 February 148 March 214 April 180 May 225 June 246 24) What is the three-period moving average for July's demand? A) 172 B) 181 C) 206 D) 217
D
A qualitative forecasting technique in which individuals familiar with specific market segments estimate the demands within these sectors that are then summed to get an overall forecast is called a: A) market survey. B) life cycle analogy. C) panel consensus. D) build-up method.
D
Fed up with her working conditions at the call center, Lisa decides to invest in a state-of-the-art sewing machine and produce limited quantities of her own clothing designs. After a few months of operation, she decides to apply some of the forecasting techniques she mastered in school. Which of these statements about her forecasts is correct? A) Her forecasts will probably be 100% accurate. B) Her demand forecasts for a year from now will probably be more accurate than her demand forecasts for three months from now. C) Her demand forecasts for each style of skirt will be less accurate than her demand forecasts for all skirts. D) The best way for her to determine the amount of fabric she needs is to forecast it based on her customer orders for each type of skirt.
D
Heidi runs a multiple regression for the output of cheese curds by using the daily temperature and the consumption of sweet clover. The intercept term is 23, the slope coefficient for the daily temperature is 1.5 and the slope coefficient for the consumption of sweet clover is 0. Which of these conclusions is most appropriate? A) Heidi should collect more data. B) The most important term in Heidi's model is the intercept. C) As the daily temperature rises, the intercept term probably decreases. D) Heidi should drop the sweet clover term from her model.
D
McMahon and Tate advertising company is interested in an appropriate mix of print, radio, and television ads for their new client. Darrin Stevens performs a multiple regression on the effects of dollars spent on each type of media on dollars of sales of product. Darrin uses data from the most recent advertising campaigns and develops the following equation: y = 254,215 + 6.79 × Print - 1.4 × Radio + 16.87 × Television The r-squared statistic is 0.77. Which of the following statements is BEST? A) At a minimum, the client will sell $254,215 worth of product after the new advertising campaign. B) At a maximum, the client will sell $254,215 worth of product after the new advertising campaign. C) This equation will be of no use in predicting the amount of sales based on advertising in these media. D) The client should spend more money on television advertising than on radio advertising.
D
Nora Damus reviews her forecasting triumphs and failures as part of her annual report to the Chief Operating Officer. She notes that her monthly forecast for batteries has a mean forecast error of 20, and a mean absolute deviation of 20. Which of the following statements about her forecast is BEST? A) Nora has miscalculated her mean forecast error. B) Nora has miscalculated her mean absolute deviation. C) Nora has a strongly negative tracking signal. D) Nora has a strongly positive tracking signal.
D
The panel consensus forecasting approach requires that the forecasting team discuss their forecast as a team but the ________ requires that each member of the team develop a separate forecast initially.
Delphi method
A collaborative planning, forecasting and replenishment system eliminates the need for forecasting.
F
A seasonal pattern in time series data is evident when the level of the variable of interest moves erratically up or down from one period to the next.
F
Demand was low two years ago but increased sharply last year thanks to an aggressive marketing campaign. A time series model that puts the greatest emphasis on the most recent period is probably the best choice to predict next year's demand.
F
Qualitative forecasts are used when there is plenty of relevant data.
F
The independent variable is the quantity the forecaster is interested in estimating with a linear regression model.
F
The slope of the regression equation is positive if the r-squared value is greater than 0.0.
F
The tracking signal calculated for the first forecast is always either +1 or -1.
F
What distinguishes collaborative planning, forecasting, and replenishment (CPFR) systems from traditional planning approaches is the emphasis on forecasting.
F
When there is a significant upward or downward trend in the data, the two best forecasting models are exponential smoothing and linear regression.
F
________ is unpredictable movement from one time period to the next
Randomness
Two time series techniques that are appropriate when the data display a strong upward or downward trend are ________ and ________.
adjusted exponential smoothing, linear regression
In order to indicate ________ in a forecast model, you should use the mean forecast error approach rather than the mean absolute deviation approach.
bias
Models that predict demand based upon some independent factor(s) other than time are ________ forecasting models.
causal
Supply chain partners might use a(n) ________ to develop joint sales and operations plans and projections of output if they have agreed on a common set of objectives.
collaborative planning, forecasting, and replenishment (CPFR)
The greater the randomness in the data, the ________ the value of the alpha in an exponential smoothing forecast.
greater
Two smoothing models that yield identical forecasts are exponential smoothing with an alpha equal to ________ and a moving average with n equal to ________.
one, one