OPMA Chapter 003

qualitative

88. (p. 50) Name the four basic types of forecasting. 1. ______________________________ 2. Time series analysis 3. casual 4.simulation

A

A company has a MAD of 10. Its wants to have a 99.7 percent control limits on its forecasting system. It's most recent tracking signal value is 3.1. What can the company conclude from this information? A. The forecasting model is operating acceptably B. The forecasting model is out of control and needs to be corrected C. The MAD value is incorrect D. The upper control value is less than 20 E. It is using an inappropriate forecasting methodology

C

A company has actual unit demand for four consecutive years of 100, 105, 135, and 150. The respective forecasts were 120 for all four years. Which of the following is the resulting MAD value that can be computed from this data? A. 2.5 B. 10 C. 20 D. 22.5 E. 30

C

A company has actual unit demand for three consecutive years of 124, 126, and 135. The respective forecasts for the same three years are 120, 120, and 130. Which of the following is the resulting MAD value that can be computed from this data? A. 1 B. 3 C. 5 D. 15 E. 123 MAD = ABS((124-120)+(126-120)+(135-130))/3 =15/3=

20

A company has calculated its running sum of forecast errors to be 1,000 and its tracking signal is 50. What is the company's mean absolute deviation? _________________________________ Tracking Signal = RSFE/MAD. Hence, 50 = 1,000/MAD = 50 x MAD = 1,000. MAD =

16

A company has calculated its running sum of forecast errors to be 400 and its mean absolute deviation is exactly 25. What is the company's tracking signal? _________________________________ Tracking Signal = RSFE/MAD = 400/25 =

B

A company has calculated its running sum of forecast errors to be 500 and its mean absolute deviation is exactly 35. Which of the following is the company's tracking signal? A. Cannot be calculated based on this information B. About 14.3 C. More than 35 D. Exactly 35 E. About 0.07 The tracking signal is RSFE/MAD = 500/35 =

zero

A company has had actual unit demand for four consecutive years of 100, 110, 125, and 150. The respective forecasts using exponential smoothing were 120 for each of those four years. What value of alpha, the smoothing constant, was the firm using? ____________________________________

B

A company hires you to develop a linear regression forecasting model. Based on the company's historical sales information, you determine the intercept value of the model to be 1,200. You also find the slope value is minus 50. If after developing the model you are given a value of X = 10, which of the following is the resulting forecast value using this model? A. - 1,800 B. 700 C. 1,230 D. 1,150 E. 12,000

C

A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values (i.e., year 2010 = 100, year 2011 = 120, year 2012 = 140, and year 2013 = 210), which of the following is the simple moving average forecast for year 2014? A. 100.5 B. 140.0 C. 142.5 D. 145.5 E. 155.0 Forecast for 2014 = (100+120+140+210)/4 = 570/4 =

C

A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values (i.e., year 2011 = 130, year 2012 = 110, and year 2013 =160), which of the following is the simple moving average forecast for year 2014? A. 100.5 B. 122.5 C. 133.3 D. 135.6 E. 139.3 Forecast for 2014 = (130+110+160)/3 = 400/4 =

210

A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values (i.e., year 2011 = 185, year 2012 = 215, and year 2013 =230), what is the simple moving average forecast for year 2014? __________________________________ Forecast for 2014 = (185+215+230)/3 = 630/3 =

C

A company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values (i.e., year 2011 = 160, year 2012 = 140 and year 2013 = 170), and we want to weight year 2011 at 30%, year 2012 at 30% and year 2013 at 40%, which of the following is the weighted moving average forecast for year 2014? A. 170 B. 168 C. 158 D. 152 E. 146 Forecast for 2014 = (160x0.3) + (140x0.3) + (170x0.4)=

12300

A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values (i.e., year 2012 = 11,000 and year 2013 = 13,000), and we want to weight year 2012 at 35% and year 2013 at 65%, what is the weighted moving average forecast for Year 2014? __________________________________________ Forecast for 2014 = (11,000 x 0.35) + (13,000 x 0.65) = 3,850 + 8,450 =

B

A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values (i.e., year 2012 = 110 and year 2013 = 130), and we want to weight year 2012 at 10% and year 2013 at 90%, which of the following is the weighted moving average forecast for year 2014? A. 120 B. 128 C. 133 D. 138 E. 142 Forecast for 2014 = (110x0.1) + (130x0.9) = 11 + 117 =

C

A company wants to generate a forecast for unit demand for year 2014 using exponential smoothing. The actual demand in year 2013 was 120. The forecast demand in year 2013 was 110. Using this data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2014 forecast value? A. 100 B. 110 C. 111 D. 114 E. 120 Forecast = 110 + 0.1 x (120-110) = 111

1005

As a consultant you have been asked to generate a unit demand forecast for a product for Year 2014 using exponential smoothing. Actual demand in year 2013 was 950 but the forecast for that year 1,060. Using this data and a smoothing constant alpha of 0.5, which of the following is the resulting year 2014 forecast value? ________________________________________ Forecast for 2014 = 1,060 + 0.5 x (950-1,060) =

C

As a consultant you have been asked to generate a unit demand forecast for a product for year 2014 using exponential smoothing. The actual demand in year 2013 was 750. The forecast demand in year 2013 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2014 forecast value? A. 766 B. 813 C. 897 D. 1,023 E. 1,120 Forecast = 960 + 0.3 x (960-750) = 897

B

Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value? A. 1,000 B. 1,030 C. 1,070 D. 1,130 E. 970 Forecast = 1,100 + 0.3 x (1,100-1,000) = 1,030

B

Given a prior forecast demand value of 230, a related actual demand value of 250, and a smoothing constant alpha of 0.1, what is the exponential smoothing forecast value for the following period? A. 230 B. 232 C. 238 D. 248 E. 250 Forecast = 230 + 0.1 x (250-230) =

B

Heavy sales of umbrellas during a rain storm is an example of which of the following? A. A trend B. A causal relationship C. A statistical correlation D. A coincidence E. A fad

C

If a firm produced a product that was experiencing growth in demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be which of the following? A. Close to zero B. A very low percentage, less than 10% C. The more rapid the growth, the higher the percentage D. The more rapid the growth, the lower the percentage E. 50 % or more

A

If a firm produced a standard item with relatively stable demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be in which of the following ranges? A. 5 % to 10 % B. 20 % to 50 % C. 20 % to 80 % D. 60 % to 120 % E. 90 % to 100 %

C

If the intercept value of a linear regression model is 40, the slope value is 40, and the value of X is 40, which of the following is the resulting forecast value using this model? A. 120 B. 1,600 C. 1,640 D. 2,200 E. 64,000 The linear regression line is of the form Y = a + bX, where Y is the value of the dependent variable that we are solving for, a is the Y intercept, b is the slope, and X is the independent variable. Hence, Y = 40 + 40 x 40 =

A

If you were selecting from a variety of forecasting models based on MAD, which of the following MAD values from the same data would reflect the most accurate model? A. 0.2 B. 0.8 C. 1.0 D. 10.0 E. 100.0

D

In business forecasting, what is usually considered a long-term time period? A. Three months or longer B. Six months or longer C. One year or longer D. Two years or longer E. Ten years or longer

B

In business forecasting, what is usually considered a medium-term time period? A. Six weeks to one year B. Three months to two years C. One to five years D. One to six months E. Six months to six years

D

In business forecasting, what is usually considered a short-term time period? A. Four weeks or less B. More than three months C. Six months or more D. Less than three months E. One year

D

In general, which forecasting time frame best identifies seasonal effects? A. Short-term forecasts B. Quick-time forecasts C. Long range forecasts D. Medium term forecasts E. Rapid change forecasts

A

In general, which forecasting time frame compensates most effectively for random variation and short term changes? A. Short-term forecasts B. Quick-time forecasts C. Long range forecasts D. Medium term forecasts E. Rapid change forecasts

C

In general, which forecasting time frame is best to detect general trends? A. Short-term forecasts B. Quick-time forecasts C. Long range forecasts D. Medium term forecasts E. Rapid change forecasts

A

In most cases, demand for products or services can be broken down into several components. Which of the following is not considered a component of demand? A. Average demand for a period B. A trend C. Seasonal elements D. Past data E. Autocorrelation

D

In most cases, demand for products or services can be broken down into several components. Which of the following is not considered a component of demand? A. Average demand for a period B. A trend C. Seasonal elements D. Past data E. Autocorrelation

B

In most cases, demand for products or services can be broken into several components. Which of the following is considered a component of demand? A. Forecast error B. Autocorrelation C. Previous demand D. Consistent demand E. Repeat demand

D

In time series data depicting demand which of the following is not considered a component of demand variation? A. Trend B. Seasonal C. Cyclical D. Variance E. Autocorrelation

A

The exponential smoothing method requires which of the following data to forecast the future? A. The most recent forecast B. Precise actual demand for the past several years C. The value of the smoothing constant delta D. Overall industry demand data E. Tracking values

E

Which of the following are used to describe the degree of error? A. Weighted moving average B. Regression C. Moving average D. Forecast as a percent of actual E. Mean absolute deviation

B

Which of the following considerations is not a factor in deciding which forecasting model a firm should choose? A. Time horizon to forecast B. Product C. Accuracy required D. Data availability E. Analyst availability

C

Which of the following forecasting methodologies is considered a causal forecasting technique? A. Exponential smoothing B. Weighted moving average C. Linear regression D. Historical analogy E. Market research

B

Which of the following forecasting methodologies is considered a qualitative forecasting technique? A. Simple moving average B. Market research C. Linear regression D. Exponential smoothing E. Multiple regression

D

Which of the following forecasting methodologies is considered a time series forecasting technique? A. Delphi method B. Exponential averaging C. Simple movement smoothing D. Weighted moving average E. Simulation

A

Which of the following forecasting methodologies is considered a time series forecasting technique? A. Simple moving average B. Market research C. Leading indicators D. Historical analogy E. Simulation

A

Which of the following forecasting methods can be used for short-term forecasting? A. Simple exponential smoothing B. Delphi technique C. Market research D. Hoskins-Hamilton smoothing E. Serial regression

D

Which of the following forecasting methods is very dependent on selection of the right individuals who will judgmentally be used to actually generate the forecast? A. Time series analysis B. Simple moving average C. Weighted moving average D. Delphi method E. Panel consensus

C

Which of the following forecasting methods uses executive judgment as its primary component for forecasting? A. Historical analogy B. Time series analysis C. Panel consensus D. Market research E. Linear regression

A

Which of the following is a possible source of bias error in forecasting? A. Failing to include the right variables B. Using the wrong forecasting method C. Employing less sophisticated analysts than necessary D. Using incorrect data E. Using standard deviation rather than MAD

E

Which of the following is not one of the basic types of forecasting? A. Qualitative B. Time series analysis C. Causal relationships D. Simulation E. Force field analysis

B

Which of the following is the portion of observations you would expect to see lying within a plus or minus 2 MAD range? A. 57.04 B. 89.04 C. 98.33 D. 99.86 E. 100.00

C

Which of the following is the portion of observations you would expect to see lying within a plus or minus 3 MAD range? A. 57.05 percent B. 88.95 percent C. 98.36 percent D. 99.85 percent E. 100 percent

B

You are hired as a consultant to advise a small firm on forecasting methodology. Based on your research you find the company has a MAD of 3. Its wants to have a 99.7 percent control limits on its forecasting system. It's most recent tracking signal value is 15. What should be your report to the company? A. The forecasting model is operating acceptably B. The forecasting model is out of control and needs to be corrected C. The MAD value is incorrect D. The upper control value is less than 20 E. The company is using an inappropriate forecasting methodology

A

You are using an exponential smoothing model for forecasting. The running sum of the forecast error statistics (RSFE) are calculated each time a forecast is generated. You find the last RSFE to be 34. Originally the forecasting model used was selected because it's relatively low MAD of 0.4. To determine when it is time to re-evaluate the usefulness of the exponential smoothing model you compute tracking signals. Which of the following is the resulting tracking signal? A. 85 B. 60 C. 13.6 D. 12.9 E. 8