Operations Management ChapterWhich of the following statements about forecasts is/are correct? 3

Which of following situations signify that a forecasting method may need to be adjusted or changed?

Forecast errors fall outside the limits of a control chart. Forecast errors exhibit a pattern with in a control chart.

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

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

Which of the following are true of good forecasts?

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

Which of the following is/are elements of good forecasts?

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

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 are implications of accurate short-term forecasts?

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

Predictor variables are:

Related to the variable of interest. Variables whose values can be easily determined. Used in regression to predict values of the variable of interest.

Which is the correct interpretation for MAD?

Represents the average absolute forecast error.

Which of the following are considerations to be taken into account when choosing a forecasting technique?

The availability of computer software. The cost of the method. The availability of data.

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

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

True.

Which of the following is the correct formula for forecast error in period t?

et=At-Ft

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

greater

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

highest

When applying focus forecasting, the method with the _____________ is chosen to forecast the next time period.

highest accuracy

The least squares line is the line that ________________ the sum of the ______________________vertical deviations of the data points from the line.

minimizes squared

The essence of associative techniques is the development of an equation that summarizes the effects of _____________.

predictor variables

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 intervals.

time ordered

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

two or more of the most recent

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

Judgmental forecasts.

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

Matching supply with demand

Which of the following statements about naïve forecasting are true?

Naive forecasts are easy to understand. Naive forecasts use a single previous value to forecast a future value. Naive forecasts can be used with stable time series, with seasonal variations, or with trends.

Which of the following statements about forecast error is/are true?

Negative errors occur when the forecast is too high. Positive errors occur when the forecast is too low. Forecast error is the difference between the actual and predicted values in a given period.

Which of the following is the correct formula for the previous forecast plus smoothed error using trend-adjusted exponential smoothing?

St=TAFt+α(At-TAFt)

Which of the following are considerations to be taken into account when choosing a forecasting technique?

The type of data. The accuracy of the method. The availability of data.

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.

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

determine the purpose of the forecast. Establish a time horizon. Obtain, clean, and analyze data. Select a forecasting technique. Make the forecast. Monitor the forecast.

Cycles are _________________ movements similar to seasonal variations but of ________________ duration.

up-and-down longer

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

F=a+bt

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

False.

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

Ft=∑(i=1)nAt−i /n The one divided by N

Which of the following is/are true statements about simple linear regression?

If the correlation is small, the predictor variable is not of much value and another variable may be better. All data points carry equal weight.

Which of the following are possible sources of forecast errors?

Irregular variations. Incorrect forecasting method or interpretation. Random variation. Changes in the variables or relationships.

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 true statements about simple linear regression?

It is important to plot the data to see if a linear model is appropriate. It applies only when one predictor variable is used.

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

TAFt+1=St+Tt

Which is the correct interpretation of MAPE?

The average absolute percent error.

Which of the following is the correct equation for the least squares regression line?

Yc=a+bx

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

lead

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.

naïve forecast