OPSM Test 1

Deviations around the average value (i.e., the line) should be normally distributed. Which of the following supports the assumption of normality?

- A concentration of values close to the line - A small proportion of larger deviations

Quantitative forecasting approach

- Associative - Time- series

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

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

Which of the following are not components in time-series data?

- Competitor's actions - Outside forces - Market conditions

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

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

What are possible sources of forecast errors?

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

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

- It has acceptable error rates only for stable time series - You must find the value of n

What are advantages of the weighted moving average forecast?

- It is easy to compute - It gives more recent values higher weight - It is easy to understand

Qualitative forecasting approach

- Judgemental - Surverys

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 about correlation is/are true?

- The closer to -1, the stronger the relationship is - The closer to +1, the stronger the relationship is - A correlation > 0 indicates a positive relationship

What are some disadvantages of the weighted moving average forecast?

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

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

- 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

What statements are a correct characterization of salesforce opinions?

- While the customer may not be able to predict whether s/he will actually do what s/he wants, a salesperson can predict the follow-through - The salesforce is a good, unbiased source of information about customers' wants and needs

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

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

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

Which of the following statements is true about forecasting approaches?

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

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

Bias

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

Blank 1: highest, best, most, greatest , or maximum

Executive opinions are often used to develop _____ - _____ plans and_______ product development.

Blank 1: long Blank 2: range or term Blank 3: new

Short-term forecasts pertain to ongoing_____ . Long-term forecasts are an important_________ planning tool.

Blank 1: operations Blank 2: strategic

Time series data is a___ -____ sequence of observations taken at regular intervals.

Blank 1: time Blank 2: ordered

What is the correct formula for the linear trend equation?

F=a+bt

A correlation < 0 indicates a positive relationship

False

Salesforce opinions - The salesforce has direct contact with customers and therefore have a good sense of what customers want

False

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

False

Forecast accuracy is important enough to take one's time to fine-tune the forecast as much as possible

False - A late forecast may not be useful anymore

A correlation of +1 is preferable to a correlation if -1

False - As long as the correlation is strong, the direction doesn't matter

Forecasts can be delivered either orally or in writing, as long as they are communicated clearly

False - In writing is very important, so they can be referred back to easily

Simple linear regression cannot be used if there is time-dependence in the data

False - It can be: simply use time as your predictor variable. This is identical to linear trend analysis

Accurate forecasts are easy to produce

False - It may be straightforward to do forecasts, but it is not necessarily the case. It can be especially difficult to provide accurate forecasts

Weighted moving average forecasts can be used for all types of time series

False - It should only be used for stable time series

The expected level (value) of the forecasted quantity is the most important aspect of the forecast

False - The degree of accuracy is also important

Long-term forecasts are used for ongoing operations

False - They are of no value for day-to-day operations

Simple linear regression can be done with relatively small amounts of data, e.g. n=5

False - You need at least 20 observations

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

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

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

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=1nAt−i/n

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

Highest

The seasonal relative, also known as the seasonal _____, is the seasonal percentage applied in the ______ model

Index, multiplicative

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

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

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

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

Which of the following is/are disadvantages of consumer surveys? (Check all that apply.)

It is difficult to get a representative sample. A considerable amount of knowledge is required to correctly interpret the results for valid information. Consumer opinion may be temporarily influenced by outside factors like sales pitches.

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

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

The Delphi method is an _____ process which seeks to find a _______ forecast

Iterative, consensus

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

Judgmental forecasts

Bias is the persistent tendency of a forecast to be greater than or ____ than the ____ _______ of a time series

Less, actual values

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

Linear

Executive opinions are generally used for what type of forecasts?

Long-range

Executive opinions are often used to develop _____ - ______ plans and ____ product development

Long-range, new

What is the correct interpretation for MAD?

MAD represents the average absolute forecast error

Which of the following statements about naive forecasting are true? (Check all that apply.)

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

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

Number of periods

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

Predictor variables are variables that can be used to ______ _______ of the variable of interest

Predict values

In diffusion models, on what basis are predictions made?

Rate of adoption of new technology

Seasonal variation is:

Regularly repeating upward or downward movement that can be tied to recurring events

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

Seasonality Random variation Trend Cycles Irregular variation

What type of correlation should there be between an indicator and the variable?

Strong

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

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

What is plotted on a control chart?

The errors

Which of the following is/are true about forecasts?

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

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

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

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

The previous forecast is adjusted by a percentage of the forecasting error. It is a sophisticated weighted averaging method

Correlation measures:

The strength and direction of the relationship between two variables

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

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

Time series date is a ____-______ sequence of observations taken at regular intervals

Time-ordered

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

Time-series Associative

Forecast error is the difference between the actual and predicted values in a given period

True

Forecasts are the basis for virtually all decisions made in a business

True

Forecasts enable managers to plan for the future

True

Forecasts should be accurate

True

Forecasts should be cost-effective

True

Forecasts should be in meaningful (understandable) units

True

Long-term forecasts pertain to items that will take a long while to implement

True

Naive forecasts are easy to understand

True

Naive forecasts can be used with stable time series, and with time series that have seasonality or trends

True

Naive forecasts use a single previous value to forecast a future value

True

Negative forecast errors occur when the forecast is too high

True

Positive forecast errors occur when the forecast is too low

True

Simple linear regression - if the correlation is small, the predictor variable is not much value and another variable may be better

True

Simple linear regression applies only when one predictor variable is used

True

Simple linear regression has all points carry equal weight

True

Simple linear regression is important to plot the data to see if a linear model is appropriate

True

The standard error of the estimate measures the scatter of the data points around the line

True

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

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

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

Yc=A+BX

Which of the following is/are advantages of consumer surveys? (Check all that apply.)

You can get information that may be unavailable anywhere else. Consumers are able to give direct feedback to companies.

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.

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

greater

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

highest accuracy

The most common approach for forecasting cyclical date is explanatory, using ____

leads

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

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

trend

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

two or more of the most recent