mgt chp 3

Put the steps in the forecasting process in the correct order, starting at the top.

1. determine the purpose of forecast 2. establish a time horizon 3. obtain, clean, and analyze data 4. select a forecasting technique 5. make the forecast 6. monitor the forecast

From the list of forecasting approaches identify all those that are the quantitative type.

Associative Time-series

A firm is forecasting the sales of carpets based on the number of building permits issued in their county. Which technique are they using?

Associative model

Forecasting technique that uses explanatory variables to predict future demand.

Associative model

A number of different approaches can be used to obtain a starting forecast. Which of the following would be appropriate?

Average of first several periods Subjective value Actual for the prior period

What are the similarities of using the centered moving average method and the simple moving average method?

Both compare a period average to an overall average to find the seasonal relative or index. Both work well when there is no trend present in the data.

What are some commonly encountered nonlinear trend types?

Exponential trend Growth curve Life cycle trend Parabolic trend

Which of the following is the correct formula for the linear trend equation?

F=a+bt

Which of the following statements about forecasts is/are correct?

Forecasts enable managers to plan for the future. Forecasts are the basis for virtually all decisions made in a business

Which of the following are true of good forecasts?

Forecasts should be accurate. Forecasts should be cost-effective. Forecasts should be in meaningful (understandable) units.

Which of the following are elements of good forecasts?

Forecasts should be cost-effective. Forecasts should be easy to understand and use. Forecasts should be reliable.

Which of the following statements about time-series data is/are always true?

Forecasts using time series data assume that past patterns will continue in the future. Time series are observed at regular intervals.

Which of the following is the correct formula for the n-period weighted moving average?

Ft = wt-n(At-n) +... +wt-2(At-2) + wt-1(At-1) +... + wt-n(At-n)

Which of the following is the correct formula for the exponential smoothing forecast?

Ft=Ft-1+α(At-1-Ft-1)

Which of the following is the correct formula for an n-period moving average forecast for time period t?

Ft=∑i=1,n At-i/ n

Which of the following statements is NOT true about forecasts?

If done carefully, forecasts very rarely are inaccurate.

Which of the following are implications of accurate short-term forecasts?

Increased profits through improved operations. Increased confidence, which would allow the diversion of resources to longer-term planning. Greater credibility throughout the organization.

Which of the following is/are advantages of the moving average forecast?

It is easy to compute. It smooths out random variation, making patterns more evident. It is easy to understand.

Which of the following statements about the steps in the forecasting process are true?

It is important to first determine the purpose of the forecast. The forecast may not perform as desired, so it is necessary to monitor the process.

Which of the following is/are advantages of the weighted moving average forecast?

It is more reflective of the most recent occurrences. It gives more recent values higher weight.

Forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers, executives, and experts.

Judgmental forecasts

From the list of forecasting approaches identify all those that are the qualitative type.

Judgmental, Surveys

Diffusion models tend to have lower accuracy than quantitative models. Given that, why might a firm use a diffusion model?

Lack of historical data

Forecasts are the basis for many decisions and an essential input for what?

Matching supply with demand

Which of the following is/are disadvantages of the moving average forecast?

Potential loss of information of less recent values by decreasing the number of values. All the values of the average are weighted equally.

Which of the following statements is true about forecasting approaches?

Qualitative forecasts allow personal opinions to be included in the forecast. Associative models use explanatory variables to predict the future.

In diffusion models, on what basis are predictions made?

Rate of adoption of new technology

Which of the following are components in time-series data?

Seasonality Random variation Irregular variation Trend Cycles

Which of the following are ways to improve forecast accuracy?

Shorten the lead time of responding to forecasts. Shorten the forecasting time horizon. Increase the flexibility of operations. Maintain accurate and up-to-date information.

Which of the following is the correct formula for the trend-adjusted exponential smoothing forecast?

TAFt+1=St+Tt

What are the differences of using the centered moving average method and the simple moving average method?

The centered moving average works better when there is a trend in the data. The centered moving average typically requires more calculations.

Which of the following statements is/are true about the seasonal relative? (Check all that apply.)

The seasonal percentages in the multiplicative model are referred to as as seasonal relatives. A seasonal relative of 1.25 indicates that the period is 25% above the average.

Which of the following statements is true about long-term forecasts?

They pertain to items that will take a long while to implement.

Which of the following is the correct formula for the current trend estimate using trend-adjusted exponential smoothing?

Tt=Tt-1+β(TAFt-TAFt-1-Tt-1)

Which of the following statements is/are true about trend-adjusted exponential smoothing?

Unlike with trend analysis, the trend estimate can be adjusted if it changes. It should be used instead of simple exponential smoothing when there is a trend present in the data.

Which of the following statements are true about starting exponential smoothing forecasts?

Use an average of several values to start off the initial forecast for the forecast series. Use a naive forecast for F2 to start off the forecast series.

In the equations for the coefficients of a line, what is the y term?

Value of the time series

Which are the correct interpretations of a and b in the trend equation F=a+bt?

a is the intercept, b is the slope of the line.

True or false: The expected level (value) of the forecasted quantity is the most important aspect of the forecast.

false

Forecast accuracy for groups of items tends to be ______ than for individual items.

greater

Which of the following is/are disadvantages of the weighted moving average forecast?

it requires considerable effort to determine the weights. It does not work well for time series with trends or seasonality. The value of n might be arbitrary.

The most common approach for forecasting cyclical data uses variables that relates to, and _____, the variable of interest.

lead

Trend analysis develops an equation that will describe the trend present in data. The trend may be ________ or non-linear.

linear

Focus forecasting uses the forecasting technique that has the __________ accuracy for the given data set among a set of possible forecasting methods.

most

A(n) _____ uses a single previous value of a time series as the basis of a forecast. This approach can be used with a stable series, with seasonal variations, or with trend.

naive forecast

Short-term forecasts pertain to ongoing ________. Long-term forecasts are an important _______ planning tool

operations, strategic

In time-series data, _____ are regularly repeating upward or downward movements in series values that can be tied to recurring events.

seasonal variations

Time series data is a ____________________ sequence of observations taken at regular interval

time ordered

With respect to the patterns formed by time-series data, _____ refers to a long-term upward or downward movement in the data.

trend

True or False: Forecasts covering a shorter time horizon tend to be more accurate than long-term forecasts.

true

The moving average forecast uses ______ actual data values to generate a forecast.

two or more of the most recent

Cycles are _____ movements similar to seasonal variations but of _____ duration.

up-and-down; longer

Which of the following is/are true about forecasts?

-The farther into the future we try to forecast, the less accurate the forecast becomes. -There will generally be some inaccuracy in the forecast, i.e., the actual values will differ from forecasted values. -It is assumed that any patterns or causal systems that were in place in the past will continue in the future.

The seasonal relative, also known as the seasonal __________, is the seasonal percentage applied in the ________ model

index, multiplicative