Operations Management ch. 3

Which of the following statements are true about starting exponential smoothing forecasts? A) Use an average of several values to start off the initial forecast for the forecast series. B) To forecast for period t, pick an arbitrary value for Ft-1. C) Use a naive forecast for F2 to start off the forecast series.

A, C

Which of the following statements is/are not a correct characterization of salesforce opinions? A) In every time, the sales people are able to distinguish between what customers would like to do and what they actually will do. B) The salesforce has direct contact with customers and therefore have a good sense of what customers want. C) The salesforce is a good, unbiased source of information about customers' wants and needs.

A, C

Which of the following are implications of accurate short-term forecasts? A) Increased profits through improved operations. B) Decreased focus on medium-term planning as effort is being put into accuracy for the short term. C) Increased confidence, which would allow the diversion of resources to longer-term planning. D) Greater credibility throughout the organization.

A, C, D

Which of the following statements about correlation is/are true? A) A correlation close to -1 indicates a strong relationship between two variables. B) A correlation < 0 indicates a positive relationship. C) A correlation close to +1 indicates a strong relationship between two variables. D) A correlation > 0 indicates a positive relationship. E) A correlation of +1 is preferable to a correlation of -1.

A, C, D

Which of the following statements about forecast error is/are true? A) Positive errors occur when the forecast is too low. B) Positive errors occur when the forecast is too high. C) Negative errors occur when the forecast is too high. D) Negative errors occur when the forecast is too low. E) Forecast error is the difference between the actual and predicted values in a given period.

A, C, E

Which of the following statements about the steps in the forecasting process are true? A) It is important to first determine the purpose of the forecast. B) After the purpose of the forecast is determined, the next step is to select the forecasting technique. C) Once the data is obtained, the next step is to establish a time horizon. D) The forecast may not perform as desired, so it is necessary to monitor the process.

A, D

Which of the following is/are advantages of the moving average forecast? A) It smooths out random variation, making patterns more evident. B) You must find the value of n. C) It works well for all types of time series (stable, seasonal...) D) It is easy to compute. E) It is easy to understand.

A, D, E

A value of zero (0) for a tracking signal indicates ______. A) no bias in the forecast B) strong bias in the forecast C) no error in the forecast

A, there is no bias

Which of the following statements is NOT true about forecasts? A) Forecasts farther into the future are more difficult to do accurately. B) If done carefully, forecasts very rarely are inaccurate. C) Forecasting aggregates of items (e.g., regional sales) accurately is D) easier than forecasting individual items.

B

Which of the following is/are disadvantages of the weighted moving average forecast? A) It is difficult to compute using a spreadsheet. B) It requires considerable effort to determine the weights. C) The value of n might be arbitrary. D) It does not work well for time series with trends or seasonality.

B, C, D

Which of the following is/are elements of good forecasts? A) Forecast accuracy is important enough to take one's time to fine-tune the forecast as much as possible. B) Forecasts should be reliable. C) Forecasts should be easy to understand and use. D) Forecasts should be cost-effective.

B, C, D

Forecasts are the basis for many decisions and an essential input for what? A) Improving output quality B) Improving the strategic plan C) Matching supply with demand

C

Which of the following is the correct formula for the exponential smoothing forecast? A) Ft=Ft-1-α(At-1-Ft-1) B) Ft=Ft-1+α(At-1+Ft-1) C) Ft=Ft-1+α(At-1-Ft-1)

C

Which of the following is the correct formula for the linear trend equation? A) F=b+at B) F=b-at C) F=a+bt D) F=a-bt

C

Which of the following represents an error of zero on a control chart? A) The range of random variability B) The upper control limit C) The center line D) The lower control limit

C

Forecasts are the basis of an organization's schedules. True/ False

True

A tracking signal compares the cumulative forecast error to the MAD in order to detect any ______ in errors over time.

bias

The Delphi Method is an _______ process which seeks to find a _______ forecast.

iterative, consensus

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

linear

Executive opinions are often used to develop ________-________ plans and ________ product development.

long, range, new

The least squares line is the line that _______ the sum of the vertical deviations of the _______ data points from the line. Listen to the complete question

minimizes, squared

A value of 0.25 or less of r2 indicates a ________ predictor. A value between 0.25 and 0.8 indicates a _______ predictor.

poor, moderate

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

False

The tracking signal method looks for bias in the forecast and is therefore preferred to the control chart method of monitoring forecast errors. True/ False

False: The control chart method looks at each error individually and therefore provides more information, including information on possible bias in the forecast.

What is plotted on a control chart? A) The forecast values B) The actual values C) The errors

C

The moving average forecast uses ______ actual data values to generate a forecast. A) two or more of the most recent B) one year of the most recent C) only last time period's D) five of the most recent

A

Which are the correct interpretations of a and b in the trend equation F=a+bt? A) a is the intercept, b is the slope of the line. B) a is the time period, b is the smoothing constant. C) a is the slope of the line, b is the time period.

A

Which is the correct interpretation of MSE? A) MSE is the average squared forecast error. B) MSE is the average absolute forecast error. C) MSE is the average absolute percent forecast error.

A

Deviations around the average value (i.e., the line) should be normally distributed. which of the following supports the assumption of normality. A) A concentration of values close to the line B) A small proportion of larger deviations C) A wide spread of values around the line D) A large proportion of larger deviations

A, B

What are some commonly encountered nonlinear trend types? A) Growth curve B) Life cycle trend C) Parabolic trend D) Sine curve E) Exponential trend

A, B, C, E

A firm is forecasting the sales of carpets based on the number of building permits issued in their county. Which technique are they using? A) Judgmental forecasts B) Associative model C) Time-series forecasts

B

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. A) Delphi forecast B) naive forecast C) associative forecast D) demand forecast

B

r2 measures the degree of variation in the values of the _____ variable that is "explained" by the _________ variable. A) predictor; uncorrelated B) dependent; independent C) independent; predictor

B

Predictor variables are: A) increasing or decreasing in value over time. B) related to the variable of interest. C) used in regression to predict values of the variable of interest. D) variables whose values can be easily determined.

B, C, D

Which of the following statements about time-series data is/are always true? A) Time series only observe daily demand. B) Forecasts using time series data assume that past patterns will continue in the future. C) Forecasts using time series data try to find a relationship between the data and another variable. D) Time series are observed at regular intervals.

B, D

Which of the following is/are disadvantages of consumer surveys? (Check all that apply.) A) Consumers are unable to give direct feedback to companies. B) It is difficult to get a representative sample. C) It takes a long time to analyze results of a survey due to high response rates. D) A considerable amount of knowledge is required to correctly interpret the results for valid information. E) Consumer opinion may be temporarily influenced by outside factors like sales pitches.

B, D, E

Bias is the persistent tendency for forecasts to do what? A) Have forecast errors too close to zero B) Be less than the actual values C) Be greater or less than the actual values D) Be greater than the actual values

C

Executive opinions are generally used for what type of forecasts? A) Short-range B) Medium-range C) Long-range

C

Which is the correct interpretation of MAPE? A) MAPE is the average squared forecast error. B) MAPE is the average absolute error. C) MAPE is the average absolute percent error.

C

Which of the following statements is true about long-term forecasts? A) They can be performed to a high degree of accuracy. B) They are used for ongoing operations. C) They pertain to items that will take a long while to implement.

C

From the list of forecasting approaches identify all those that are the quantitative type. A) Surveys B) Judgmental C) Time-series D) Associative

C, D

What limits are typically used with the tracking signal? A) 0 B) ±1 C) ±2 D) ±3 E) ±4

E

Time series data is a ________ -_______ sequence of observations taken at regular intervals.

time, ordered

Which of the following statements is a correct characterization of salesforce opinions? A) The salesforce is unable to determine long-term customer demand given bias caused by recent experiences. B) The salesforce has a sense of what customers want because of their direct contact with customers. C) The salesforce is an unbiased source of information about customers' wants and needs.

B

Which of the following statements is/are true about the seasonal relative? (Check all that apply.) A) The seasonal percentages in the additive model are referred to as as seasonal relatives. B) A seasonal relative of 1.25 indicates that the period is 25% above the average. C) A seasonal relative of 0.80 means that the period is 80% below the average. D) The seasonal percentages in the multiplicative model are referred to as as seasonal relatives.

B, D

With respect to the patterns formed by time-series data, _____ refers to a long-term upward or downward movement in the data. A) cycles B) regular variation C) random variation D) trend

D

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

Operations, Strategic

True or false: Seasonal variation can occur on a daily or weekly basis, not just a monthly or quarterly basis. True/ False

True

The seasonal relative, also known as the seasonal _______, is the seasonal percentage applied in the _______ model.

indexes, multiplicative

A number of different approaches can be used to obtain a starting forecast. Which of the following would be appropriate? A) Average of first several periods B) Subjective value C) Actual for the next period D) Actual for the prior period

A, B, D

Which of the following are ways to improve forecast accuracy? A) Shorten the lead time of responding to forecasts. B) Increase the flexibility of operations. C) Shorten the forecasting time horizon. D) Include more variables in the model. E) Maintain accurate and up-to-date information.

A, B, C, E

As a forecasting tool, the Delphi method is useful for what type of forecasting? A) Technological forecasting B) Sales of an existing product C) Short-range forecasting

A

Which of following situations signify that a forecasting method may need to be adjusted or changed? A) Forecast errors exhibit a pattern within a control chart. B) Forecast errors fall outside the limits of a control chart. C) Bad weather has caused a spike in errors.

A, B its not C because This is an irregular variation which is unlikely to occur again with regularity.

Correlation measures: A) both the strength and direction of the relationship between two variables. B) only the strength of the relationship between two variables. C) only the direction of the relationship between two variables.

A

Forecast accuracy for groups of items tends to be ______ than for individual items. A) greater B) less C) no different

A

Forecasting technique that uses explanatory variables to predict future demand. A) Associative model B) Time-series forecasts C) Judgmental forecasts

A

Forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers, executives, and experts. A) Judgmental forecasts B) Associative model C) Time-series forecasts

A

In time-series data, _____ are regularly repeating upward or downward movements in series values that can be tied to recurring events. A) seasonal variations B) seasonal relatives C) naive variations D) exponential relatives

A

Which of the following is a major weakness of the tracking signal approach? A) Its use of cumulative errors B) The values are harder to compute C) Its range of ±4 or ±5 is too narrow

A

Which of the following is the correct formula for an n-period moving average forecast for time period t? Multiple choice question. A) Ft=∑i=1nAt-i/ n B) Ft=∑ni=1At-i/ n+1 C) Ft=∑ni=1At-i/ n-1

A

Which of the following is the correct formula for the n-period weighted moving average? A) Ft = wt-n(At-n) +... +wt-2(At-2) + wt-1(At-1) +... + wt-n(At-n) B) Ft=(w1(At-1)+w2(At-2)+...+wn(At-n))/n C) Ft = wn(At-1) + wn-2(At-2) +...+ wn(At-n) +... wt-n(At-n)

A

Which of the following statements is correct? A) Both forecast accuracy and cost are important factors to consider in choosing a forecasting method. B) Only forecast cost is important to consider in choosing a forecasting method, since a company cannot spend all its money on forecasting. C) Only forecast accuracy is important to consider in choosing a forecasting method, since accuracy is the most important factor.

A

Which of the following is/are advantages of consumer surveys? (Check all that apply.) A) Consumers are able to give direct feedback to companies. B) You can get information that may be unavailable anywhere else. C) You do not have to deal with the possibility of irrational behavioral patterns. D) Information obtained from surveys can be easily interpreted.

A, B

Which of the following are the assumptions underlying regression analysis? A) Variations around the line are random. B) Predictions are not made outside the range of observed values. C) The relationship between variables must be positive. D) The deviations around the line should be normally distributed.

A, B, D

Which of the following statements about naive forecasting are true? (Check all that apply.) A) Naive forecasts use a single previous value to forecast a future value. B) Naive forecasts can be used with stable time series, with seasonal variations, or with trends. C) Naive forecasts use multiple variables to try to make predictions. D) Naive forecasts are easy to understand. E) Naive forecasts are not worthwhile.

A, B, D

Which of the following are possible sources of forecast errors? A) Incorrect forecasting method or interpretation B) Changes in the variables or relationships C) Increasing linear trend D) Random variation E) Irregular variations

A, B, D, E

Which of the following statements about exponential smoothing forecasts is/are true? A) The previous forecast is adjusted by a percentage of the forecasting error. B) The smoothing constant α is always 0.1. C) It is a sophisticated weighted averaging method D) The closer α is to 1, the greater the smoothing.

A, C

Which of the following statements about forecasts is/are correct? A) Forecasts enable managers to plan for the future. B) Forecasts only relate to predicting demand. C) Forecasts are the basis for virtually all decisions made in a business. D) Accurate forecasts are easy to produce.

A, C

Which of the following are considerations to be taken into account when choosing a forecasting technique? A) The type of data. B) The analyst's preferences for certain methods. C) The availability of data. D) The accuracy of the method.

A, C, D

Which of the following are true of good forecasts? A) Forecasts should be in meaningful (understandable) units. B) Forecasts need not be in writing. C) Forecasts should be accurate. D) Forecasts should be cost-effective. E) Forecasts should include only the planning time and not the time F) to implement the change.

A, C, D

Which of the following are components in time-series data? A) Trend B) Market conditions C) Cycles D) Random variation E) Irregular variation F) Outside forces G) Seasonality H) Competitors' actions

A, C, D, E, G

The essence of associative techniques is the development of an equation that summarizes the effects of _____. A) correlation B) predicted variables C) predictor variables D) regression

C

Which of the following is/are advantages of the weighted moving average forecast? A) It can be used for all types of time series. B) It gives equal weight to all values. C) It gives more recent values higher weight. D) It is more reflective of the most recent occurrences.

C, D

Which of the following is/are disadvantages of the moving average forecast? A) It is difficult to compute. B) Random variations are smoothened out, making structural patterns less evident. C) All the values of the average are weighted equally. D) Potential loss of information of less recent values by decreasing the number of values. E) It is complicated to explain.

C, D