Supply Chain 331 Ch. 4

________ forecasts use a series of past data points to make a forecast

Time-series

A time-series model uses...

only historical values of the quantity of interest to predict future values of that quantity

what long-range forecasts can be used for:

planning for... -new products -capital expenditures -facility location or expansion -research and development.

what short-range forecasts can be used for:

planning.... -purchasing -job scheduling -workforce levels -job assignments -production levels.

The two general approaches to forecasting are:

qualitative and quantitative

________ forecasts employ one or more mathematical models that rely on historical data and/or associative variables to forecast demand.

quantitative

Most forecasting techniques assume that there is some underlying stability in the system.

True

One advantage of exponential smoothing is the limited amount of record keeping involved

True

The quarterly "make meeting" of Lexus dealers is an example of a sales force composite forecast.

True

The sales force composite forecasting method relies on salespersons' estimates of expected sales.

True

Forecasts may be influenced by a product's position in its life cycle.

True

In trend projection, the trend component is the slope of the regression equation.

True

Gradual upward or downward movement of data over time is called

a trend

Identify four quantitative forecasting methods

-naive -moving averages, -exponential smoothing, -trend projection -linear regression.

What are the three realities of forecasting that companies face

1) outside factors that we cannot predict or control often impact the forecast. 2) most forecasting techniques assume that there is some underlying stability in the system 3)both product family and aggregated forecasts are more accurate than individual product forecasts.

seven steps of forecasting:

1. Determine the use of the forecast. 2. Select the items to be forecasted. 3. Determine the time horizon of the forecast. 4. Select the forecasting model(s). 5. Gather the data needed to make the forecast. 6. Make the forecast. 7. Validate and implement the results

A six-month moving average forecast is generally better than a three-month moving average forecast if demand: A) is rather stable. B) has been changing due to recent promotional efforts. C) follows a downward trend. D) exceeds one million units per year. E) follows an upward trend.

A

Which time-series model below assumes that demand in the next period will be equal to the most recent period's demand? A) naïve approach B) moving average approach C) weighted moving average approach D) exponential smoothing approach E) trend projection

A - not very accurate

The larger the number of periods in the simple moving average forecasting method, the greater the method's responsiveness to changes in demand.

Answer: FALSE

________ is a forecasting technique based upon salespersons' estimates of expected sales.

Answer: Sales force composite

Which of the following is not present in a time series? A) seasonality B) operational variations C) trend D) cycles E) random variations

B

exponential smoothing uses...

BOTH past forecasts and past demand data to generate a new forecast

The forecasting technique that pools the opinions of a group of experts or managers is known as: A) the expert judgment model. B) multiple regression. C) jury of executive opinion. D) market survey. E) management coefficients.

C

What forecasting systems combine the intelligence of multiple supply chain partners? A) FORE B) MULTISUP C) CPFR D) SUPPLY E) MSCP

C

Which of the following statements about time-series forecasting is true? A) It is always based on the assumption that future demand will be the same as past demand. B) It makes extensive use of the data collected in the qualitative approach. C) It is based on the assumption that the analysis of past demand helps predict future demand. D) Because it accounts for trends, cycles, and seasonal patterns, it is always more powerful than associative forecasting. E) All of the above are true

C

Which of the following uses three types of participants: decision makers, staff personnel, and respondents? A) jury of executive opinion B) sales force composite C) Delphi method D) associative models E) time series

C

Increasing the number of periods in a moving average will accomplish greater smoothing, but at the expense of: A) manager understanding. B) accuracy. C) stability. D) sensitivity to real changes in the data. E) All of the above are diminished when the number of periods increases.

D

Which of the following most requires long-range forecasting (as opposed to short-range or medium-range forecasting) for its planning purposes? A) job scheduling B) production levels C) cash budgeting D) capital expenditures E) purchasing

D

One use of short-range forecasts is to determine: A) planning for new products. B) capital expenditures. C) research and development plans. D) facility location. E) job assignments.

E

Time-series data may exhibit which of the following behaviors? A) trend B) random variations C) seasonality D) cycles E) They may exhibit all of the above.

E

Which of the following is not a type of qualitative forecasting? A) jury of executive opinion B) sales force composite C) market survey D) Delphi method E) moving average

E

Forecasts of individual products tend to be more accurate than forecasts of product families.

False

Mean squared error and exponential smoothing are two measures of the overall error of a forecasting model.

False

What are the differences between quantitative and qualitative forecasting method

Quantitative methods use mathematical models to analyze historical data. Qualitative methods incorporate such factors as the decision maker's intuition, emotions, personal experiences, and value systems in determining the forecast.

A naïve forecast for September sales of a product would be equal to the sales in August.

True

A time-series model uses a series of past data points to make the forecast.

True

Cycles and random variations are both components of time series

True

Forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize a:

long-range time horizon.

A forecast with a time horizon of about 3 months to 3 years is typically called a

medium-range forecast.

As compared to long-range forecasts, short-range forecasts...

deal with less comprehensive issues supporting management decision

The fundamental difference between cycles and seasonality is the:

duration of the repeating patterns

________ forecasts address the business cycle by predicting inflation rates, money supplies, housing starts, and other planning indicators.

economic

The three major types of forecasts used by organizations in planning future operations are

economic, technological, and demand.

Demand forecasts serve as...

inputs to financial, marketing, and personnel planning

Short-range forecasts tends to ________ longer-range forecasts

more accurate

Describe the three forecasting time horizons and their use

short range: generally less than three months, used for planning purchasing, job scheduling, workforce levels, job assignments, and production level medium range: usually from three months up to three years, used for sales planning, production planning and budgeting, cash budgeting, analysis of various operating plan long range: usually three years or more, used for planning for new products, capital expenditures, facility location or expansion, and R&

Forecasts are usually classified by time horizon into which three categories

short-range, medium-range, and long-range

________ forecasts are concerned with rates of technological progress, which can result in the birth of exciting new products, requiring new plants and equipment

technological

The associative model incorporates...

the variables or factors that might influence the quantity being forecast.

associative models use...

variables such as price and promotional expenditures, which are related to product demand, to predict demand

What two numbers are contained in the daily report to the CEO of Walt Disney Parks & Resorts regarding the six Orlando parks?

yesterday's forecasted attendance and yesterday's actual attendance