OPSY 5315 Chapter 4 Forecasting

Correct impacts a maturing product might have on OM strategy:

-Manufacturing process stabilizes -Cost cutting is instituted -Optimum capacity may be achieved

Correct impacts technology innovation in the manufacturing process might have on OM strategy:

-New human resource skills -Product design needs to be revised -Quality standards need to be revised

Correct impacts changes in laptop computer design that builds in wireless technology might have on OM strategy:

-New human resource skills -Purchasing needs to be revised -Inventory needs to be revised

21) 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

3) What two numbers are contained in the daily report to the CEO of Walt Disney Parks & Resorts regarding the six Orlando parks? A) yesterday's forecasted attendance and yesterday's actual attendance B) yesterday's actual attendance and today's forecasted attendance C) yesterday's forecasted attendance and today's forecasted attendance D) yesterday's actual attendance and last year's actual attendance E) yesterday's forecasted attendance and the year-to-date average daily forecast error

A

30) Which of the following values of alpha would cause exponential smoothing to respond the SLOWEST to forecast errors? A) 0.10 B) 0.2246 C) 0.50 D) 0.90 E) cannot be determined

A

4) The two general approaches to forecasting are: A) qualitative and quantitative. B) mathematical and statistical. C) judgmental and qualitative. D) historical and associative. E) judgmental and associative.

A

Linear regression analysis

A straight-line mathematical model to describe the functional relationships between independent and dependent variables.

A global network of organizations and activities that supply a firm with goods and services is referred to as:

A supply chain

trend

A sustained period of growth or decline.

forecast bias

A tendency to create errors that are predominantly positive or negative

Trend projection

A time-series forecasting method that fits a trend line to a series of historical data points and then projects the line into the future for forecasts.

Exponential Smoothing

A weighted-moving-average forecasting technique in which data points are weighted by an exponential function.

Which of these is NOT one of the basic functions of the management process? A) Inspecting B) Staffing C) Leading D) Controlling

A) Inspecting

Which of the following does NOT belong to the planning phase of project management? A) Monitoring resources B) Defining the project C) Team organization D) Goal setting

A) Monitoring resources

What is the percentage defective in an average lot of goods inspected through acceptance sampling?

AOQ

Inspections should NOT take place:

After costly or irreversible processes

A strategy is:

An action plan to achieve a mission

Adaptive smoothing

An approach to exponential smoothing forecasting in which the smoothing constant is automatically changed to keep errors to a minimum.

Multiple regression

An associative forecasting method with > 1 independent variable Multiple regression forecast = ŷ = a + b1x1 + b2x2 (4-17)

mean error (ME)

An average of forecast errors; useful for indicating forecast bias.

mean absolute deviation (MAD)

An average of the absolute values of a set of forecast errors.

mean squared error (MSE)

An average of the squared values of a set of forecast errors.

jury of executive opinion

An expert panel composed of managers.

Black Swan

An incident of extreme con- sequence, unexpected or considered highly improbable.

Which is the best statement regarding an operating characteristic curve?

As the AQL decreases, the producer's risk also decreases

Quantitative Models

Associative models Time series techniques

Naive Approach

Assumes demand in next period is the same as demand in most recent period.

naïve forecast

Assuming a future value equals the most recent actual value available.

mean absolute percent error (MAPE)

Average of the absolute values of a set of percent error

11) Short-range forecasts tends to ________ longer-range forecasts. A) be less accurate than B) be more accurate than C) have about the same level of accuracy as D) employ the same methodologies as E) deal with more comprehensive issues than

B

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

B

20) John's House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous month's demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 1000 pancakes in May, 2200 pancakes in June, and 3000 pancakes in July, what should be the forecast for August? A) 2400 B) 2511 C) 2067 D) 3767 E) 1622

B

7) A forecast with a time horizon of about 3 months to 3 years is typically called a: A) long-range forecast. B) medium-range forecast. C) short-range forecast. D) weather forecast. E) strategic forecast.

B

Which of the following is NOT a reason why domestic business operations decide to change to some form of international operation? A) Improve operations B) Attract and retain local talent C) Improve the supply chain D) Improve products

B) Attract and retain local talent

Which of the following does NOT increase profit by improving quality? A) Flexible pricing B) Higher warranty costs C) Increased productivity D) Improved reputation

B) Higher warranty costs

Which of the following costs is NOT a cost of quality? A) Lost goodwill B) Research and development C) Scrap D) Rework

B) Research and development

Sales force composite

Based on salespersons' estimates of expected sales.

1) 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 does NOT represent competing on response? A) Based on flexibility B) Concerned with reliability of scheduling C) Based on providing uniqueness D) Based on uniqueness

C) Based on providing uniqueness (this is differentiation)

Which of the following is NOT considered to be a stakeholder? A) Community members B) Distributors C) Competitors D) Customers

C) Competitors

5) 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

7) 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

Productivity increases when:

Inputs decrease while outputs remain the same

What is a correct example or response?

Johnson Electric, as it competes on speed-speed in design, production, and delivery

Which of the following is the Japanese term used to describe continuous improvement efforts?

Kaizen

The critical path of a network is the:

Longest time path through the netowrk

time series decomposition

Modeling observed values based on identifiable component influences.

Time serious techinques

Moving averages Exponential smoothing Seasonal relatives

Which international operations strategies uses decentralized authority with substantial autonomy at each business?

Multidomestic

Which forecasting method considers several variables that are related to the variable being predicted?

Multiple regression

A device or technique that ensure production of a good unit every time is a:

Poka-yoke

simple exponential smoothing

Predicting a future value by combining the previous prediction and some portion of the error in that prediction.

causal modeling

Predicting an outcome by identifying its relationship with one or more other factors

forecasting

Predicting future events.

simple moving average

Predicts a value by averaging a fixed number of most-recent actual values.

The creation of goods and services is referred to as:

Production

extrapolation

Projecting existing data into the future.

coefficient of determination

Proportion of variation in a dependent variable that is explained by a regression model.

FORECASTING APPROACHES

Qualitative Quantitative

tracking signal

Ratio of the sum of a set of forecast errors over the MAD of that forecast.

Seasonal variations

Regular upward or downward movements in a time series that tie to recurring events.

Which of the following determinants of service quality means the firm performs the service right the first time and that the firm honors its promises?

Reliability

What is a correct example of differentiation?

Safeskin Corporation, as it's number one in latex exam gloves that were designed to prevent all allergic reactions

Which forecasting model is based upon salespersons' estimates of expected sales?

Sales force composite

What is a data pattern that repeats itself after a period of days, weeks, months, or quarters?

Seasonality

cyclic variation

Seasonality with a cycle time longer than 1 year; generally associated with economic influences on time series data.

The economic activities that typically produce an intangible product are referred to as:

Services

The forecasting time horizon that would typically be easiest to predict for would be the:

Short range

Market survey

Solicits input from customers or potential customers regarding future purchasing plans.

What is a correct example of cost leadership?

Southwest Airlines, as it fulfills a need for low-cost and short-hop flights

EVALUATING FORECASTS

Successful forecasts may lead to competitive advantage, so it is no surprise that we base our evaluations on accuracy, responsiveness, and cost.

Competition in the 21st century is no longer between companies; it is between:

Supply chains

Qualitative Models

Surveys Expert opinion panels Delphi groups

(T/F) For a multiplicative time series model, the sum of the seasonal indexes should equal the number of seasons.

T(rue)

(T/F) Qualitative forecasting techniques should be applied in situations where time series data exists, but where conditions are expected to change.

T(rue)

(T/F) Smoothing methods are more appropriate for a stable time series than when significant trend or seasonal patterns are present.

T(rue)

(T/F) The exponential smoothing forecast for any period is a weighted average of all the previous actual values for the time series

T(rue)

(T/F) The mean squared error is influenced much more by large forecast errors than is the mean absolute error.

T(rue)

(T/F) Time series data can exhibit seasonal patterns of less than one month in duration

T(rue)

(T/F) Time series methods base forecasts only on past values of the variables

T(rue)

(T/F) To make period-to-period comparisons more meaningful and identify trend, the time series should be deseasonalized.

T(rue)

Jury of executive opinion

Takes the opinion of a small group of high-level managers and results in a group estimate of demand.

Forecasting

The art and science of predicting future events

Mean Absolute Percent Error (MAPE)

The average of the absolute differences between the forecast and actual values expressed as a percent of actual value. MAPE = Σabsolute percent error/n (4-7)

Mean Squared Error (MSE)

The average of the squared differences between the forecasted and observed values. MSE = Σ(Forecast errors)^2/n

Accuracy

The central measure of success in forecasting. Can be expressed in several ways, including the common performance measures of error, mean error (ME), mean squared error (MSE), mean absolute deviation (MAD), tracking signal, and mean absolute percent error (MAPE).

responsiveness

The degree to which a technique modifies forecasts to reflect recent changes in past data.

error

The difference between an observed value and a predicted value

planning horizon

The farthest point in the future considered in decision making.

What is the goal for mass customization?

The goal is to product customized products, whenever and wherever needed

The project organization may be LESS helpful when:

The job is familiar to the existing organization

natural variation

The randomness inherent in a process, also known as random variation.

The American Society for Quality defines quality as:

The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs

Which of the following is a limitation of PERT and CPM?

There is the inherent danger of placing too much emphasis on the critical path

unknown unknown

Uncertainty omitted from planning because the decision maker is unaware of its presence.

Time series

Uses a series of past data points to make a forecast.

Delphi Method

Uses an interactive group process that allows experts to make forecasts.

regression analysis

Using mathematical relationships between two or more variables to predict future values.

time series

Values observed in chronological order.

10. Causal models a. should avoid the use of regression analysis. b. attempt to explain a time series' behavior. c. do not use time series data. d. All of the alternatives are true.

b (attempt to explain a time series' behavior.)

10) 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

1) A naïve forecast for September sales of a product would be equal to the forecast for August. true or false

false

1) Forecasts of individual products tend to be more accurate than forecasts of product families. true or false

false

2) The larger the standard error of the estimate, the more accurate the forecasting model. true or false

false

3) In a regression equation where y-hat is demand and x is advertising, a coefficient of determination (R2) of .70 means that 70% of the variance in advertising is explained by demand. true or false

false

4) Regression lines graphically depict "cause-and-effect" relationships. true or false

false

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

false

6) Mean squared error and exponential smoothing are two measures of the overall error of a forecasting model. true or false

false

8) In trend projection, a negative regression slope is mathematically impossible. true or false

false

Quantitative forecasts

forecasts that employ mathematical modeling to forecast demand.

ASSOCIATIVE TECHNIQUES

identify useful relationships between different sets of data, so that one set of data might be predicted by knowledge of the other set of data.

Technological forecasts

long-term forecasts concerned with the rates of technological progress.

1) Forecasts may be influenced by a product's position in its life cycle. True or false

true

1) If a forecast is consistently greater than (or less than) actual values, the forecast is said to be biased. true or false

true

1) Linear-regression analysis is a straight-line mathematical model to describe the functional relationships between independent and dependent variables. true or false

true

1) The sales force composite forecasting method relies on salespersons' estimates of expected sales. true or false

true

10) A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y per period. true or false

true

11) Demand for individual products can be driven by product life cycles. true or false

true

2) A time-series model uses a series of past data points to make the forecast. true or false

true

2) Cycles and random variations are both components of time series. true or false

true

2) Demand forecasts serve as inputs to financial, marketing, and personnel planning. true or false

true

2) Most forecasting techniques assume that there is some underlying stability in the system. true or false

true

16) The fundamental difference between cycles and seasonality is the: A) duration of the repeating patterns. B) magnitude of the variation. C) ability to attribute the pattern to a cause. D) all of the above E) none of the above

A

19) 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

43) If Brandon Edward were working to develop a forecast using a moving averages approach, but he noticed a detectable trend in the historical data, he should: A) use weights to place more emphasis on recent data. B) use weights to minimize the importance of the trend. C) change to an associative multiple regression approach. D) use a simple moving average. E) change to a qualitative approach.

A

6) Forecasts are usually classified by time horizon into which three categories? A) short-range, medium-range, and long-range B) finance/accounting, marketing, and operations C) strategic, tactical, and operational D) exponential smoothing, regression, and time series E) departmental, organizational, and industrial

A

8) Which of the following techniques uses variables such as price and promotional expenditures, which are related to product demand, to predict demand? A) associative models B) exponential smoothing C) weighted moving average D) moving average E) trend projection

A

A forecast that projects a company's sales is:

A demand forecast

Bias

A forecast that is consistently higher or lower than actual values of a time series.

Coefficient of determination

A measure of the amount of variation in the dependent variable about its mean that is explained by the regression equation;.

Mean Absolute Deviation (MAD)

A measure of the overall forecast error for a model. MAD = Σ|Actual - Forecast| ----------------------- n

correlation coefficient

A measure of the strength of any linear relationship between two sets of observations.

Coefficient of correlation

A measure of the strength of the relationship between two variables.

Standard error of estimate

A measure of variability around the regression line -- its standard deviation

A tracking signal is:

A measurement of how well a forecast is predicting actual values

Tracking signal

A measurement of how well a forecast is predicting actual values. Tracking signal equation = Σ (Actual demand in the period I - Forecast demand in period i) /MAD (4-18)

exogenous variation

A nonrepeating deviation in a time series created by a distinct, identifiable external influence

Delphi method

A qualitative forecasting technique in which experts achieve consensus through a blind process via a facilitator

seasonality

A repeating pattern in a time series.

3) Which of the following is NOT a step in the forecasting process? A) Determine the use of the forecast. B) Eliminate any assumptions. C) Determine the time horizon of the forecast. D) Select the forecasting model. E) Validate and implement the results.

B

4) As compared to long-range forecasts, short-range forecasts: A) are less accurate. B) deal with less comprehensive issues supporting management decisions. C) employ similar methodologies. D) all of the above E) none of the above

B

32) The primary purpose of the mean absolute deviation (MAD) in forecasting is to: A) estimate the trend line. B) eliminate forecast errors. C) measure forecast accuracy. D) seasonally adjust the forecast. E) remove random variations.

C

34) Suppose that the last four months of sales were 8, 10, 15, and 9 units, respectively. Suppose further that the last four forecasts were 5, 6, 11, and 12 units, respectively. What is the Mean Absolute Deviation (MAD) of these forecasts? A) 2 B) -10 C) 3.5 D) 9 E) 10.5

C

(T/F) A four-period moving average forecast for period 10 would be found by averaging the values from periods 10, 9, 8, and 7

F(alse)

(T/F) A time series model with a seasonal pattern will always involve quarterly data.

F(alse)

(T/F) All quarterly time series contain seasonality

F(alse)

(T/F) An alpha (α) value of .2 will cause an exponential smoothing forecast to react more quickly to a sudden drop in demand than will an equal to .4.

F(alse)

(T/F) Any recurring sequence of points above and below the trend line lasting less than one year can be attributed to the cyclical component of the time series.

F(alse)

(T/F) If the random variability in a time series is great and exponential smoothing is being used to forecast, then a high alpha value (α) should be used

F(alse)

(T/F) If the random variability in a time series is great, a high α value should be used to exponentially smooth out the fluctuations.

F(alse)

(T/F) Quantitative forecasting methods can be used when past information about the variable being forecast is unavailable

F(alse)

(T/F) Quantitative forecasting methods do not require that patterns from the past will necessarily continue in the future.

F(alse)

(T/F) Seasonal components with values above 1.00 indicate actual values below the trend line.

F(alse)

(T/F) Trend in a time series must be linear

F(alse)

(T/F) With fewer periods in a moving average, it will take longer to adjust to a new level of data values

F(alse)

Cause-and-effect diagrams are also known as:

Fish-bone charts

percent error

Forecast error divided by the corresponding actual value.

Focus forecasting

Forecasting that tries a variety of computer models and selects the best one for a particular application.

Qualitative forecasts

Forecasts that incorporate such factors as the decision maker's intuition, emotions, personal experiences, and value system.

The father of scientific management is:

Frederick Taylor

Which of the following forecasting steps comes directly after determining the time horizon of the forecast?

Gather the data

A large percentage of the revenue of most firms is spent of which function?

Operations

The stated purpose of NAFTA is to:

Phase out all trade and tariff barriers among Canada, Mexico, and the U.S.

Among the following, the critical path and slack time analysis MOST help:

Pinpoint activities that need to be closely watched

Gantt charts are:

Planning charts used to schedule resources and allocate time

Economic forecasts

Planning indicators that are valuable in helping organizations prepare a medium-to long-range forecasts.

The three phases involved in the management of large projects are:

Planning, scheduling, and controlling

weighted moving average

Predicts a value by calculating a weighted average of a fixed number of most-recent actual value

Which of the following measures the proportion of variation (3 standard dev.) between the center of the process and the nearest specification limit?

Process capability index

SWOT analysis refers to:

Strengths, opportunities, weaknesses, and threats

What is the THIRD level in work breakdown structure? (WBS)

Subtasks in major tasks

(T/F) Exponential smoothing with α=.2 and a moving average with n=5 put the same weight on the actual value for the current period.

T(rue)

(T/F) If a time series has a significant trend pattern, then one should not use a moving average to forecast.

T(rue)

The person who believed that management must do more to improve the work environment and processes so that quality can be improved was:

W. Edwards Deming

independent variable

independent variable

Cycles

patterns in the data that occur every several years.

2) Focus forecasting tries a variety of computer models and selects the best one for a particular application. true or false

true

3) A naïve forecast for September sales of a product would be equal to the sales in August. true or false

true

3) The quarterly "make meeting" of Lexus dealers is an example of a sales force composite forecast. true or false

true

4) One advantage of exponential smoothing is the limited amount of record keeping involved. true or false

true

7) In trend projection, the trend component is the slope of the regression equation. true or false

true

9) Seasonal indices adjust raw data for patterns that repeat at regular time intervals. true or false

true

known unknown

A source of uncertainty known to a decision maker, usually evident in past experience or data.

dependent variable

An outcome of interest influenced by one or more factors

33) Given forecast errors of -1, 4, 8, and -3, what is the mean absolute deviation? A) 2 B) 3 C) 4 D) 8 E) 16

C

Which type of control chart should be used when it is possible to have more than one mistake per item?

C-Chart

Which of the following is the FIRST step in a forecasting system?

Determine the use of the forecast

Which of the following is a quantitative forecasting method?

Exponential smoothing

Process capability:

Means that the natural variation of the process must be small enough to produce products that meet the standard

What is the most popular example of specialized software for managing projects?

Microsoft project

Which of the following is the purpose or rationale for an organization's existence?

Mission

seasonal relatives

A set of numerical values that describe a seasonal pattern.

expert opinion panel

A small group of highly knowledgeable people who develop prediction through discussion and consensus.

Which of the following statements is NOT true about the forecasting in the service sector? A) Detailed forecasts of demand are not needed B) Forecasting in the service sector presents some unusual challenges C) Demand patterns are often different from those in non-service sectors D) Hourly demand forecasts may be necessary

A) Detailed forecasts of demand are not needed

Which of the following OM decisions determines how a good or service is produced and commits management to specific technology, quality, human resources, and capital investment?

A) Process and capacity design

Which of the following is NOT an OM strategy/issue during the growth stage of the product lifecycle? A) Reduce capacity B) Forecasting critica C) Enhance distribution D) Shift towards product focus

A) Reduce capacity

Which of the following is NOT considered to be one of the three primary functions that all organizations perform? A) Research and Development B) Production/Operations C) Finance/Accounting D) Marketing

A) Research and Development

Which of these time estimates is NOT used in PERT? A) Standard time B) Optimistic time C) Pessimistic time D) Most likely time

A) Standard time

Which of the following statements is NOT true? A) When capacity exists, cost can decrease B) When capacity is inadequate, customers can be lost C) When excess capacity exists, cost can increase D) When capacity is inadequate, market share can shrink

A) When capacity exists, cost can decrease

40) A seasonal index for a monthly series is about to be calculated on the basis of three years' accumulation of data. The three previous July values were 110, 150, and 130. The average demand over all months during the three-year time period was 190 . What is the approximate seasonal index for July? A) 0.487 B) 0.684 C) 1.462 D) 2.053 E) cannot be calculated with the information given

B

5) Computer monitoring of tracking signals and self-adjustment if a signal passes a preset limit is characteristic of: A) exponential smoothing including trend. B) adaptive smoothing. C) trend projection. D) focus forecasting. E) multiple regression analysis.

B

9) The three major types of forecasts used by organizations in planning future operations are: A) strategic, tactical, and operational. B) economic, technological, and demand. C) exponential smoothing, Delphi, and regression. D) causal, time-series, and seasonal. E) departmental, organizational, and territorial.

B

12) 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

14) Gradual upward or downward movement of data over time is called: A) seasonality. B) a cycle. C) a trend. D) exponential variation. E) random variation.

C

25) Which of the following is NOT a characteristic of exponential smoothing? A) smoothes random variations in the data B) uses an easily altered weighting scheme C) weights each historical value equally D) has minimal data storage requirements E) uses the previous period's forecast

C

27) Given an actual demand this period of 103, a forecast value for this period of 99, and an alpha of .4, what is the exponential smoothing forecast for next period? A) 94.6 B) 97.4 C) 100.6 D) 101.6 E) 103.0

C

29) Given an actual demand this period of 61, a forecast for this period of 58, and an alpha of 0.3, what would the forecast for the next period be using exponential smoothing? A) 45.5 B) 57.1 C) 58.9 D) 61.0 E) 65.5

C

36) For a given product demand, the time-series trend equation is 53 - 4x. The negative sign on the slope of the equation: A) is a mathematical impossibility. B) is an indication that the forecast is biased, with forecast values lower than actual values. C) is an indication that product demand is declining. D) implies that the coefficient of determination will also be negative. E) implies that the cumulative error will be negative.

C

37) Yamaha manufactures which set of products with complementary demands to address seasonal variations? A) golf clubs and skis B) swimming suits and winter jackets C) jet skis and snowmobiles D) pianos and guitars E) ice skates and water skis

C

42) ________ expresses the error as a percent of the actual values. A) MAD B) MSE C) MAPE D) FIT E) The smoothing constant

C

5) A fundamental distinction between trend projection and linear regression is that: A) trend projection uses least squares while linear regression does not. B) only linear regression can have a negative slope. C) in trend projection the independent variable is time; in linear regression the independent variable need not be time, but can be any variable with explanatory power. D) trend projection can be a function of several variables, while linear regression can only be a function of one variable. E) trend projection uses two smoothing constants, not just one.

C

5) 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

6) 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

8) Forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize a: A) short-range time horizon. B) medium-range time horizon. C) long-range time horizon. D) naive method, because there is no data history. E) trend extrapolation.

C

Which of the following is NOT one of the techniques for building employee empowerment? A) Build communication networks that include employees B) Build high-morale organizations C) Eliminate formal organization structures such as teams and quality circles D) Develop open, supportive supervisors

C) Eliminate formal organization structures such as teams and quality circles

Which of the following tasks would NOT typically represent an operations management activity at Hard Rock Cafe? A) Receiving a shipment of incoming food ingredients B) Designing an efficient layout C) Filing a tax return D) Preparing an employee schedule

C) Filing a tax return

Which of the following is NOT a part of project controlling? A) Using feedback loop to revise the project plan B) Close monitoring of resources, costs, quality, and budgets C) Sequencing and allotting time to all project activities D) Shifting resources to where they are needed most

C) Sequencing and allotting time to all project activities

Which of the following is NOT true regarding the importance of the role that an operations manager play in addressing service quality? A) The tangible component of many services is important B) The operations manager should realize that the customer expectations are the standard against which the service is judged C) The manager may be able to influence the quality of the service but has little control over the customers' expectation D) Managers must expect exceptions

C) The manager may be able to influence the quality of the service but hast little control over the customers' expectation

CPFR is:

Collaborative, planning, forecasting, and replenishment

Competing on differentiation is:

Concerned with uniqueness

Associative models

Correlation coefficients Regression analysis

What is the shortest duration required to complete an activity?

Crash time

crowdsourcing

Crowd outsourcing; combining independent efforts of many people to accomplish a task

17) In time series, which of the following cannot be predicted? A) large increases in demand B) cycles C) seasonal fluctuations D) random variations E) large decreases in demand

D

18) What is the forecast for May using a four-month moving average? Nov. Dec. Jan. Feb. Mar. April 39 36 40 42 48 46 A) 38 B) 42 C) 43 D) 44 E) 47

D

22) 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

23) Which of the following statements comparing exponential smoothing to the weighted moving average technique is TRUE? A) Exponential smoothing is more easily used in combination with the Delphi method. B) More emphasis can be placed on recent values using the weighted moving average. C) Exponential smoothing is considerably more difficult to implement on a computer. D) Exponential smoothing typically requires less record keeping of past data. E) Exponential smoothing allows one to develop forecasts for multiple periods, whereas the weighted moving average technique does not.

D

24) Which time-series model uses BOTH past forecasts and past demand data to generate a new forecast? A) naïve B) moving average C) weighted moving average D) exponential smoothing E) trend projection

D

26) Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast? A) 0 B) 1 divided by the number of periods C) 0.5 D) 1.0 E) cannot be determined

D

3) The last four weekly values of sales were 80, 100, 105, and 90 units. The last four forecasts were 60, 80, 95, and 75 units. These forecasts illustrate: A) qualitative methods. B) adaptive smoothing. C) slope. D) bias. E) trend projection.

D

31) A forecasting method has produced the following over the past five months. What is the mean absolute deviation? Actual Forecast Error |Error| 10 11 -1 1 8 10 -2 2 10 8 2 2 6 6 0 0 9 8 1 1 A) -0.2 B) -1.0 C) 0.0 D) 1.2 E) 8.6

D

35) A time-series trend equation is 25.3 + 2.1x. What is your forecast for period 7? A) 23.2 B) 25.3 C) 27.4 D) 40.0 E) 179.2

D

39) Demand for a certain product is forecast to be 800 units per month, averaged over all 12 months of the year. The product follows a seasonal pattern, for which the January monthly index is 1.25. What is the seasonally-adjusted sales forecast for January? A) 640 units B) 798.75 units C) 801.25 units D) 1000 units E) 83.33 units

D

4) The tracking signal is the: A) standard error of the estimate. B) absolute deviation of the last period's forecast. C) MAD. D) ratio of cumulative error / MAD. E) MAPE.

D

6) The degree or strength of a relationship between two variables is shown by the: A) alpha. B) mean. C) mean absolute deviation. D) coefficient of correlation. E) cumulative error.

D

7) If two variables were perfectly correlated, what would the coefficient of correlation r equal? A) 0 B) -1 C) 1 D) B or C E) none of the above

D

Which of the following is NOT one of the 10 strategic OM decisions listen in the text? A) Location B) Quality C) Layout D) Finance/Accounting

D) Finance/Accounting

Which of the following organizations does NOT belong to the service sector? A) Costco B) Southwest Airlines C) San Diego Zoo D) Ford Motor Company

D) Ford Motor Company

Which of these is NOT an advantage of outsourcing? A) Gaining outside expertise B) Accessing outside technology C) Cost savings D) Potential creation of future compeition

D) Potential creation of future competition

Which of the following activities at an airline is NOT an operations activity? A) Catering B) Crew Scheduling C) Flying D) Sales

D) Sales

assignable variation

Deviations with a specific cause or source

Managing quality helps build successful strategies of:

Differentiation, low cost and response

1) Many services maintain records of sales noting: A) the day of the week. B) unusual events. C) the weather. D) holiday impacts. E) all of the above.

E

13) 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

2) Taco Bell's unique employee scheduling practices are partly the result of using: A) point-of-sale computers to track food sales in 15 minute intervals. B) focus forecasting. C) a six-week moving average forecasting technique. D) multiple regression. E) A and C are both correct.

E

28) A forecast based on the previous forecast plus a percentage of the forecast error is a(n): A) qualitative forecast. B) naive forecast. C) moving average forecast. D) weighted moving average forecast. E) exponential smoothing forecast.

E

38) Which of the following is TRUE regarding the two smoothing constants of the Forecast Including Trend (FIT) model? A) One constant is positive, while the other is negative. B) They are called MAD and cumulative error. C) Alpha is always smaller than beta. D) One constant smoothes the regression intercept, whereas the other smoothes the regression slope. E) Their values are determined independently.

E

41) Suppose that the demand in period 1 was 7 units and the demand in period 2 was 9 units. Assume that the forecast for period 1 was for 5 units. If the firm uses exponential smoothing with an alpha value of .20, what should be the forecast for period 3? (Round answers to two decimal places.) A) 9.00 B) 3.72 C) 9.48 D) 5.00 E) 6.12

E

How is the EF (earliest finish) computed?

ES (earliest start) + activity time

An international business is a firm that:

Engages in international trade or investment

Service sector forecasting

May require good short-term demand records, even 15-minute intervals. Demand during holidays or specific weather events may also need to be tracked.

1. Time series methods a. discover a pattern in historical data and project it into the future. b. include cause-effect relationships. c. are useful when historical information is not available. d. All of the alternatives are true.

a (discover a pattern in historical data and project it into the future.)

13. The forecasting method that is appropriate when the time series has no significant trend, cyclical, or seasonal effect is a. moving averages b. mean squared error c. mean average deviation d. qualitative forecasting methods

a (moving averages)

5. The focus of smoothing methods is to smooth a. the irregular component. b. wide seasonal variations. c. significant trend effects. d. long range forecasts.

a (the irregular component.)

19. Which of the following exponential smoothing constant values puts the same weight on the most recent time series value as does a 5-period moving average? a. α = .2 b. α = .25 c. α = .75 d. α = .8

a (α = .2)

11. A qualitative forecasting method that obtains forecasts through "group consensus" is known as the a. Autoregressive model b. Delphi approach c. mean absolute deviation d. None of these alternatives is correct.

b (Delphi approach)

3. Seasonal components a. cannot be predicted. b. are regular repeated patterns. c. are long runs of observations above or below the trend line. d. reflect a shift in the series over time.

b (are regular repeated patterns.)

6. Forecast errors a. are the difference in successive values of a time series b. are the differences between actual and forecast values c. should all be nonnegative d. should be summed to judge the goodness of a forecasting model

b (are the differences between actual and forecast values)

17. Which of the following forecasting methods puts the least weight on the most recent time series value? a. exponential smoothing with α = .3 b. exponential smoothing with α = .2 c. moving average using the most recent 4 periods d. moving average using the most recent 3 periods

b (exponential smoothing with α = .2)

14. If data for a time series analysis is collected on an annual basis only, which component may be ignored? a. trend b. seasonal c. cyclical d. irregular

b (seasonal)

18. Using exponential smoothing, the demand forecast for time period 10 equals the demand forecast for time period 9 plus a. α times (the demand forecast for time period 8) b. α times (the error in the demand forecast for time period 9) c. α times (the observed demand in time period 9) d. α times (the demand forecast for time period 9)

b (α times (the error in the demand forecast for time period 9))

8. Linear trend is calculated as T_t = 28.5 + .75t. The trend projection for period 15 is a. 11.25 b. 28.50 c. 39.75 d. 44.25

c (39.75)

9. The multiplicative model a. uses centered moving averages to smooth the trend fluctuations. b. removes trend before isolating the seasonal components. c. deseasonalizes a time series by dividing the values by the appropriate seasonal index. d. provides a unique seasonal index for each observation of the time series.

c (deseasonalizes a time series by dividing the values by the appropriate seasonal index.)

15. One measure of the accuracy of a forecasting model is the a. smoothing constant b. trend component c. mean absolute deviation d. seasonal index

c (mean absolute deviation)

12. The trend component is easy to identify by using a. moving averages b. exponential smoothing c. regression analysis d. the Delphi

c (regression analysis)

7. To select a value for α for exponential smoothing a. use a small α when the series varies substantially. b. use a large α when the series has little random variability. c. use any value between 0 and 1 d. All of the alternatives are true.

d (All of the alternatives are true.)

16. Which of the following is a qualitative forecasting method? a. trend projection b. time series method c. smoothing method d. Delphi method

d (Delphi method)

20. The time series component that is analogous to the seasonal component but over a longer period of time is the a. irregular component b. trend component c. causal component d. cyclical component

d (cyclical component)

4. Short-term, unanticipated, and nonrecurring factors in a time series provide the random variability known as a. uncertainty. b. the forecast error. c. the residuals. d. the irregular component.

d (the irregular component.)

2. Gradual shifting of a time series over a long period of time is called a. periodicity. b. cycle. c. regression. d. trend.

d (trend.)