Supply Chain Management Ch. 5

True or False: In the Delphi forecasting method,a group of internal and external experts are surveyed during several rounds in terms of future events and long- term forecasts of demand but the group members do not physically meet

True

jury of executive opinion

Used in long range planning and new product introductions

The exponential smoothing forecast has the same value as the naive forecast and is equal to: a. 0 b. 0.5 c. 1 d. insufficient information provided to determine answer

c. 1

trend variations

either an increase or decreased movements over many years and are due to factors such as population growth, population shifts or cultural changes ( linear, s-curve, exponential, or asymptotic)

what are 3 measures of forecasting accuracy

forecast error, forecast bias tracking signal

consumer survey

used to create forecasts for new products

cyclical variation

wavelike movements longer than a year influenced by macroeconomic and political factors (example business cycle)

What is demand management?

A set of activities that range from determining or estimating the demand from customer through converting specific customer orders into promised delivery does to help balance demand with supply

True or False The difference between a simple regression forecast and a multiples regression forecast is that simple regression is used when there is only one explanatory ( or independent) variable, while multiple regression is used when there are numerous explanatory variables

True

What are qualitative forecasting techniques?

Jury of executive opinion, delphi method, sales force composite, consumer survey

If a tracking signal is positive, which of the following is true? a. actual value is higher than forecast b. actual value is less than forecast c. actual value is equal to forecast d. unable to draw any conclusion

a. actual value is higher than forecast

random variation

due to unexpected or unpredictable events such s natural disasters

delphi method

high-risk technology forecasting, large expensive projects or major new product introduction (forecast depends on knowledge of the experts)

what is demand forecasting?

it provides an estimate of future demand and the basis for planning and sound business decisions. The goal of a good forecasting technique is to minimize the deviation between actual demand and the forecast, having accurate demand forecasts

sales force composite

reliable but an individual bases, could negatively impact the effectiveness

seasonal variation

show peaks and valleys that repeat over a constant interval ( snowblowers in winter, lawn mower summer)

what are the main components of a time series?

trend variations, cyclical variations, seasonal variations, random variations

True or False The modern day business environment must deal with a more homogenous consumer base, which has caused the evolution of a more "push" oriented environment where suppliers must focus on manufacturing high volumes of standardized goods

False

True or False: if you felt that recent demand trends were more significant and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average.

False

Why is demand forecasting important for effective supply chain management?

Having accurate demand forecasts allows the purchasing department to order the amount of products, the operations department to produce the right amount of products and the logistics department to deliver the right amount of products

what is a tracking signal, and what does it provide that managers can use to improve the quality of forecasts?

a tool used to check the forecast bias, you are able to quickly identify changing trends and resulted in further improvement in their forecasts

Using the actual demand shown in the table below, what is the forecast for May (accurate to 1 decimal) using a 4- month weighted moving average and the weights 0.1, 0.2, 0.3 0.4 ( with the heaviest weight applied to the most recent period)? Nov. Dec. Jan. Feb. Mar. Apr. 39 36 40 38 48 46 a. 44.4 b. 43.0 c. 42.5 d. 41.6

a. 44.4

what is the impact of the smoothing constant value on the simple exponential smoothing forecast?

alpha = smoothing constant. the exponential smoothing forecast is equivalent to the naive forecast when alpha is = to 1 with alpha value closer to 1 there is a greater emphasis on recent data resulting in a major adjust meant of the error in the last periods forecast. (when alpha has allow value more weight is placed on demand, when low placed on past demand)

Given the following information, calculate the forecast (accurate to 2 decimals) for period three using exponential smoothing and alpha= 0.3 Period Demand Forecast 1 64 59 2 70 a. 36.90 b. 57.50 c. 61.50 d. 63.35

d. 63.35

Which of the following is not a type of qualitative forecasting? a. sales force composite b. consumer survey c. jury of executive opinion d. naive method

d. naive method