SmartBook--Chapter 18: Forecasting

Which type of seasonal variation assumes that the season amount is a constant? Multiple choice question. Seasonal index Additive Seasonal factor Multiplicative

Additive

With exponential smoothing, which smoothing constant controls the speed of reaction to differences between forecasts and actual demand? Multiple choice question. Beta Delta Alpha Gamma

Alpha

When the most recent occurrences are more indicative of the future than those in the distant past, one should use which time series model? Multiple choice question. Simple moving average Linear regression Exponential Weighted moving average

Exponential

Which of the following is not a reason why exponential smoothing has been well accepted? Multiple choice question. Models are surprisingly accurate Formulating the model is relatively difficult User can understand how the model works Little computation is required to use the model

Formulating the model is relatively difficult

Match these terms from the weighted moving average equation with their meanings. Ft t Ft-1 At-1 α - The actual demand in the prior period - The desired response rate, or smoothing constant - The forecast in the prior time period - The forecast in the current time period - The time period

Ft: The forecast in the current time period. t: The time period Ft-1: The forecast in the prior time period At-1: The actual demand in the prior period α= The desired response rate, or smoothing constant

Which of the following is the formula for a single exponential smoothing?

Ft=Ft-1+α(At−1−Ft−1)

Which of the following is not an example of a qualitative forecasting technique? Multiple choice question. Historical analogy Market research Panel consensus Gamma method

Gamma method

When releasing a new product that is similar to an existing product, one could use which qualitative technique to develop a forecast? Multiple choice question. Market research Historical analogy Delphi Method Panel consensus

Historical analogy

What is the Excel function used to calculate the intercept for regression? Multiple choice question. STEXY A INTERCEPT REGRESSION B SLOPE

INTERCEPT

What is the major restriction in linear regression forecasting? Multiple choice question. It cannot use historical data It assumes that projections will fall in a straight line It relies on a lot of numerical crunching It assumes that projections will be non-linearly related

It assumes that projections will fall in a straight line

Which measure of error calculates the average absolute value of the actual forecast error? Multiple choice question. MAPE MAD TS RSFE

MAD

_____ research is used mostly for product research in the sense of looking for new product ideas.

Market

Which measurement of error measures the dispersion of some observed value from some expected value? Multiple choice question. Average demand Mean absolute percent error Mean absolute deviation Tracking Signal

Mean absolute deviation

Which measurement of error measures the dispersion of some observed value from some expected value? Multiple choice question. Mean absolute percent error Mean absolute deviation Average demand Tracking Signal

Mean absolute deviation

In business forecasting, what time frame usually refers to three months to two years? Multiple choice question. Quarter Short Medium Long

Medium

What time horizon(s) are used for strategic forecasts? Multiple choice question. Medium term Short and medium term Medium and long-term Long term

Medium and long-term

Which qualitative forecasting technique is based upon the idea that a group of people with various backgrounds can develop a more reliable forecast than a narrower group?

Panel consensus

Which of the following is not a component of demand? Multiple choice question. Trend Seasonal Planned Random

Planned

_____ forecasting techniques generally take advantage of the knowledge of experts and require much judgment.

Qualitative

_____ errors can be defined as those that cannot be explained by the forecast model being used.

Random

_____ variations are caused by chance events.

Random

A moving average can be useful in removing what for forecasting. Multiple choice question. Random fluctuations Sudden changes to demand Cyclical variations Seasonal variations

Random fluctuations

In statistics, the difference between what actually occurred and what was forecast is referred to as what? Multiple choice question. Errors Mistakes A chance for improvement Residuals

Residuals

What is the Excel function used to calculate the slope for regression? Multiple choice question. STEXY REGRESSION SLOPE INTERCEPT A B

SLOPE

What is the Excel function used to calculate the standard error estimate for regression? Multiple choice question. SLOPE A INTERCEPT B STEYX REGRESSION

STEYX

Usually, which word is associated with a period of the year characterized by some activity? Multiple choice question. Seasonal Cyclical Factor Index

Seasonal

Which forecasting model is base upon merely average past demand? Multiple choice question. Linear regression Simple moving average Weighted moving average Exponential smoothing

Simple moving average

Which is the larger measure, the standard deviation or MAD? Multiple choice question. They are equal There is no relation between these measures MAD Standard deviation

Standard deviation

What type of forecast should be used for strategy, sourcing and location decisions? Multiple choice question. Tactical Strategic Operational Independent

Strategic

Match the terms used to calculate the tracking signal with their meaning. TS RSFE MAD

TS: The tracking signal RSFE: The running sum of forecast errors, considering the nature of the error. MAD: The average of all the forecast errors (disregarding whether the deviations are positive or negative).

Exponential smoothing with trend requires three equations. Which of the following is not one of those three equations?

Yt=a+bt

Which of the following is the formula for simple regression?

Yt=a+bt

In the formula for exponential smoothing α(At-1-Ft-1) represents Multiple choice question. the trend the new forecast the old forecast a portion of the error

a portion of the error

Click and drag on elements in order Place the steps to a CPFR consensus supply chain forecast in the correct sequence. - Joint business planning - Sharing forecasts - Inventory replenishment - Creation of a front-end partnership agreement - Development of demand forecast

1. Creation of a front-end partnership agreement 2. Joint business planning 3. Development of demand forecast 4. Sharing forecasts 5. Inventory replenishment

One standard deviation is approximately how many MADs?

1.25

When summing up the forecasts errors, the value used for ||18−20|| in the calculation is

2

In the exponential smoothing method, how many pieces of information are needed to forecast the future? Multiple choice question. 1 2 3 4 In depends on the smoothing constant

3

For the various equations used for the least squares method, match the terms with their meaning a b y with line above it: t with line above it: t y n Yt

a: Y Intercept b: Slope of the line y with line above it: Average of all ys t with line above it: Average of all ts t: t value at each data point y: y value at each data point n: number of data points Yt: Value of the dependent variable computed with the regression equation.

Exponential smoothing forecasting models are surprisingly _____

accurate

Adjusting the value of alpha to more closely track actual demand is called _____ forecasting.

adaptive

The main disadvantage of the moving average is that

all individual data elements must be carried as data.

For forecasting services, _____ availability relative to expected demand is the issue.

capacity

The Delphi _____ method the identity of the individuals participating in the study.

conceals

A simple moving average gives _____________ weight to each component of the forecast; whereas a weighted moving average gives ___________ weight to each element Multiple choice question. equal; equal varying; varying varying; equal equal; varying

equal; varying

All forecasts certainly contain some

error

Multiple regression has more than one _____variable.

independent

Forecasting is needed at decoupling points to set appropriate _____ levels for these buffers.

inventory

To be of value for the purpose of forecasting, any independent variable must be a _____ indicator.

leading

In trying to forecast demand for a new product, an ideal situation would be one where an existing product or generic product could be used as a

model

Forecasting by _____ regression is appropriate when a number of factors influence a variable of interest.

multiple

With single exponential smoothing forecasting, the forecast _____when a change in direction occurs.

overshoots

In time series analysis, ____________ demand is used to predict __________ demand.

past; future

Retailers should play a critical role because shared _____ data permit the development of more accurate and timely expectations (compared with extrapolated warehouse withdrawals or aggregate store orders) for both retailers and vendors.

point-of-sale

In considering what forecasting approach to use, it is important to consider the of the forecast.

purpose

When the data is _____, the most recent past is not the most important indicator of what to expect in the future and is not given the higher weighting.

seasonal

Tactical forecasts are _________ term, while strategic forecasts are _____________ term. Multiple choice question. short; medium and long medium; long short and medium; long short; long

short; medium and long

The exponential smoothing forecasting model uses the following data, except: Multiple choice question. smoothing constant delta most recent forecast smoothing constant alpha actual demand for most recent forecast period

smoothing constant delta

Match the following terms used in the MAD equation with their meaning.

t = Period number At = Actual demand for the period t Ft = Forecast demand for the period t n = total number of periods || = A symbol used to indicate the absolute value disregarding positive and negative signs

Match the following terms used in the MAPE equation with their meaning.

t = period number At = actual demand for period t Ft = forecast demand for the period t n = total number of periods || = A symbol used to indicate the absolute value disregarding positive and negative signs

Match the following terms used in the MAD equation with their meaning. t At Rt n ||

t: Period number At: Actual demand for the period t Ft: Forecast demand for the period t n: Total number of periods ||: A symbol used to indicate the absolute value disregarding positive and negative signs.

You generally use short-term forecasts for _____ decisions such as replenishing inventory or scheduling employees in the near term.

tactical

In general, the longer the averaging period Multiple choice question. the quicker it responds to change. the smoother the plot. the less data that must be stored.

the smoother the plot.

CPFR coordinates all of the following except Multiple choice question. transportation production and purchasing demand forecasting inventory replenishment

transportation

Exponentially smoothed forecasts can be corrected somewhat from lagging by adding in a _____ adjustment.

trend

When deciding which forecasting model to use, a firm should consider all of the following except: Multiple choice question. forecasting budget weather time horizon accuracy required

weather

Exponential smoothing with trend uses two constants. What are they?

α δ

Which smoothing constant adjusts for trend? Multiple choice question. δ β α λ

δ - Delta

When the most recent occurrences are more indicative of the future than those in the distant past, one should use which time series model? Multiple choice question. Exponential Weighted moving average Simple moving average Linear regression

Exponential

Select all that apply With weighted moving averages, how are the weights selected? Check all that apply. Multiple select question. Experience Guessing Fitting to a regression line Trial and error

- Experience - Trial and error

Select all that apply Which of the following should be considered when choosing a forecasting model? Check all that apply. Multiple select question. How many departments will be using the model The magnitude of the data Firm's degree of flexibility Consequence of a bad forecast

- Firm's degree of flexibility - Consequence of a bad forecast

Match these terms used in the weighted moving average equation with their meaning. - Ft -n -At-1 -W1 -W2 -Wn Pair With: - Total number of prior periods in the forecast - Weight to be given to the actual occurrence for the period t-2 - Weight to be given to the actual occurrence for the period t-1 - Actual occurrence in the past period - Forecast for the coming period - Weight to be given to the actual occurrence for the period t-n

- Ft: Forecast for the coming period -n: Total number of prior periods in the forecast -At-1: Actual occurrence in the past period -W1: Weight to be given to the actual occurrence for the period t-1 -W2: Weight to be given to the actual occurrence for the period t-2 -Wn: Weight to be given to the actual occurrence for the period t-n

Match these forecasting types with their descriptions. - Qualitative - Time series analysis - Casual forecasting - Simulation Pair with: - Based on the idea that data relating to past demand can be used to predict future demand - Those models allow the forecaster to run through a range of assumptions about the condition of the forecast - Assumes that demand is related to some underlying factor or factors in the environment - Techniques that use managerial judgment.

- Qualitative: Techniques that use managerial judgment. - Time series analysis: Based on the idea that data relating to past demand can be used to predict future demand - Casual forecasting: Assumes that demand is related to some underlying factor or factors in the environment - Simulation: Those models allow the forecaster to run through a range of assumptions about the condition of the forecast

Match these forecasting methods with the amount of historical data they require. - Simple moving average - Weighted moving average and simple exponential smoothing + exponential smoothing with trend - Linear regression - Trend and seasonal models Pair with: - 10 to 20 observations - 6 to 12 months; weekly data are often used - 2 to 3 observations per season - 5 to 10 observations needed to start

- Simple moving average: 6 to 12 months; weekly data are often used - Weighted moving average and simple exponential smoothing + exponential smoothing with trend: 5 to 10 observations needed to start - Linear regression: 10 to 20 observations - Trend and seasonal models: 2 to 3 observations per season

Select all that apply With exponential smoothing, the value for the constant is determined both by what? Check all that apply. Multiple select question. The magnitude of the demand data The nature of the product Manager's sense of what constitutes a good response rate If demand is increasing or decreasing

- The nature of the product - Manager's sense of what constitutes a good response rate

Select all that apply Identify the basic classifications of forecasting. Multiple select question. Numerical analysis Time series analysis Causal relationships Qualitative Simulation

- Time series analysis - Causal relationships - Qualitative - Simulation

Smoothing constants must be given a value between

0 and 1

Multiple Select Question Select all that apply There are two major categories of forecast error. What are they? Check both. Multiple select question. Bias Statistical Random Modeling

Bias Random

_____ _____ is the most used of all forecasting techniques. (Enter only one word per blank.)

Blank 1: Exponential Blank 2: Smoothing

The two types of seasonal variation discussed are _____and_____ .

Blank 1: additive Blank 2: multiplicative

The real value of the MAPE is that it allows you to compare forecasts between products that have very different

Blank 1: average Blank 2: demand

If one variable changes because of the change in another variable, this is a _____ _____. (Enter only one word per blank.)

Blank 1: causal Blank 2: relationship

When decisions in forecasting are at a broader, higher level (as when introducing a new product line or concerning strategic product decisions such as new marketing areas), the term _____ _____ is generally used. (Enter only one word per blank.)

Blank 1: executive Blank 2: judgment or judgement

When demand for a product is neither growing nor declining rapidly, and if it does not have seasonal characteristics, a _____ _____ can be useful in removing the random fluctuations for forecasting.

Blank 1: moving Blank 2: average

The values selected for alpha and delta depend on how much _____variation there is in demand and how ______ the trend factor is.

Blank 1: random Blank 2: steady

In general, the _____ _____ models compensate for random variation and adjust for changes over a brief period of time.

Blank 1: short Blank 2: term

With market research, the data collection methods are primarily _____ and _____

Blank 1: surveys Blank 2: interviews

What web-based tool is being used as a means to integrate members of a supply chain? Multiple choice question. E-Commerce CPFR E-procurement Online auctions

CPFR

Which forecasting model incorporates independent variables other than time to predict future demand? Multiple choice question. Causal relationship Linear regression with trend Exponential smoothing Linear regression

Causal relationship

Which of the following is not a forecast horizon used in forecasting? Multiple choice question. Current Short Medium Long

Current

What term refers to repetitive activity that happens in other than annual recurrent periods? Multiple choice question. Random Seasonal Trend Cyclical

Cyclical

An Excel tool that can be used to calculate linear regression. Multiple choice question. Regression ToolPak Statistical Analysis ToolPak Data Analysis ToolPak Analysis ToolPak

Data Analysis ToolPak

Identifying and separating the time series data into its components. Multiple choice question. Regression Additive Multiplicative Decomposition

Decomposition

_____ of a time series means identifying and separating the time series data into various components.

Decomposition

Which qualitative technique develops a forecast by polling participants multiple times on expected forecast? Multiple choice question. Panel consensus Market research Delphi method Historical analogy

Delphi method

When calculating the RSF tracking signal calculation, which of the following is correct? Multiple choice question. The sign of the error terms does not matter The sign of the error terms matter The error terms are always positive

The sign of the error terms matter

Select all that apply In forecasting, there is more than one use for linear regression. What are they? Check all that apply. Multiple select question. Seasonal forecasting Random variable forecasting Time series forecasting Causal relationship forecasting

Time series forecasting Causal relationship forecasting

When you are trying to determine whether a forecast is keeping pace with changes in demand, you should use which measure? Multiple choice question. Mean absolute deviation RSFE MAPE Tracking signal

Tracking signal

Which measurement of error can be used to detect forecast bias? Multiple choice question. RSFE Tracking signal MAPE Mean absolute deviation

Tracking signal