forcasting

You generally use short-term forecasts for __________ decisions such as replenishing inventory or scheduling employees in the near term.

tactical

In general, the longer the averaging period

the smoother the plot.

_______ _______ is the most used of all forecasting techniques.

Exponential smoothing

The difference between the actual demand and the forecast is referred to as

forecast error

When choosing weights for a weighted moving average, the general rule states that the most recent periods should get the ________________ weighting.

highest

What term refers to the amount of correction needed in a time series to adjust for the time of the year?

seasonal factor

Which of the following should be considered when choosing a forecasting model? Check all that apply.

-Firm's degree of flexibility -Consequence of a bad forecast

A time series can be defined as chronologically ordered data that may contain one or more components of demand. What are these components?

-Seasonal -Autocorrelation -Cyclical -Trend -Random

The single exponential smoothing equation states that the _____ forecast is equal to the _____ forecast plus a portion of the _____ .

-new -old -error

One MAD is approximately how many standard deviations?

0.8

One standard deviation is approximately how many MADs?

1.25

Which of the following equations calculates the MAPE?

100n100n[Σ∣∣At−Ft∣∣At]

If a firm produced a product where they were expecting growth, what alpha value would you expect them to use?

15 to 30

When summing up the forecasts errors, the value used for ∣∣18−20∣∣18-20 in the calculation is

2

In the exponential smoothing method, how many pieces of information are needed to forecast the future?

3

If a firm produced a standard item with relatively stable demand, what alpha value would you expect them to use?

5 or 10

In most cases, demand for products or services can be broken down into six components: average demand for the period, a trend, seasonal element, cyclical elements, random variation, and autocorrelation. Match these six components with their definitions.

Average demand - This is the sum of the demand values divided by the sample size. This is the sum of the demand values divided by the sample size. Trend - This is a straight line fitted to the data. Seasonal element - This is period-by-period variations in demand. Cyclical elements - These are more difficult to determine because the time span may be unknown or the cause of the cycle may not be considered. Random - These are caused by chance events. Autocorrelation - This denotes the persistence of occurrence. More specifically, the value expected at any point is highly related with its own past values.

Which of the following is not a forecast horizon used in forecasting?

Current

_________ factors are more difficult to determine because the time span may be unknown or the cause of the cycle may not be considered.

Cyclical

What term describes when you identify and separate time series data into components?

Decomposition

Match these terms from the weighted moving average equation with their meanings.

F t= The forecast in time period t.t= The time period w 1= Weight to be given to the actual occurrence for the period t-1. A t-1= The demand in time period t-1n= Total number of prior periods in the forecast. n= Total number of prior periods in the forecast

Which of the following is not a reason why exponential smoothing has been well accepted?

Formulating the model is relatively difficult

Match these terms from the weighted moving average equation with their meanings.

Ft: The forecast in the current time period. t: The time period. Ft-1: The forecast in the prior time period. At-1: The actual demand in the prior period α: The desired response rate, or smoothing constant

Which measure of error calculates the average absolute value of the actual forecast error?

MAD

Which measurement of error measures the dispersion of some observed value from some expected value?

Mean absolute deviation

In business forecasting, what time frame usually refers to three months to two years?

Medium

Match these forecasting types with their descriptions.

Qualitative - Techniques that use managerial judgment. Time series analysis - Based on the idea that data relating to past demand can be used to predict future demand. Causal forecasting - Assumes that demand is related to some underlying factor or factors in the environment. Simulation - These models allow the forecaster to run through a range of assumptions about the condition of the forecast.

A moving average can be useful in removing what for forecasting.

Random fluctuations

Which forecasting model is base upon merely average past demand?

Simple moving average

Match the forecasting methods with the amount of historical data they require.

Simple moving average- 6 to 12 months; weekly data often used Exponential smoothing with trend- 5 to 10 observations needed to start Linear regression- 10 to 20 observations Trend and seasonal models- 2 to 3 observations per season

What type of forecast should be used for strategy, sourcing and location decisions?

Strategic

All of the following are reasons why exponential has become well accepted except:

Tests for accuracy are difficult

The weighted moving average requires what of the weights?

That they sum to one.

Adjusting the value of alpha to more closely track actual demand is called _________ forecasting.

adaptive

The two types of seasonal variation discussed are _______ and _______ .

additive, multiplicative

The main disadvantage of the moving average is that

all individual data elements must be carried as data.

With _______ the value expected at any point is highly correlated with its own past values

autocorrelation

With a simple moving average, the idea is to simply calculate the ___________ demand over the most recent periods.

average

What term refers to repetitive activity that happens in other than annual recurrent periods?

cyclical

A simple moving average gives _____________ weight to each component of the forecast; whereas a weighted moving average gives ___________ weight to each element

equal; varying

Identify the basic classifications of forecasting.

-Time series analysis -Causal relationships -Qualitative -Simulation

All forecasts certainly contain some _______

error

When the most recent occurrences are more indicative of the future than those in the distant past, one should use which time series model?

Exponential

Single exponential smoothing has the shortcoming of ________ changes in demand.

lagging

Which of the following is not a component of demand?

planned

Usually, which word is associated with a period of the year characterized by some activity?

seasonal

Match the following terms used in the MAD equation with their meaning.

t = Period number At = Actual demand for the period t Ft = Forecast demand for the period t n = total number of periods || = A symbol used to indicate the absolute value disregarding positive and negative signs

In time series analysis, ____________ demand is used to predict __________ demand. Multiple choice question.

past; future

When the data is _______ the most recent past is not the most important indicator of what to expect in the future and is not given the higher weighting.

seasonal

In general, the __________-________ models compensate for random variation and adjust for changes over a brief period of time.

short, term

Tactical forecasts are _________ term, while strategic forecasts are _____________ term.

short; medium and long

As the moving average period becomes __________ and _________ periods are used, there is more oscillation and there is a closer following of the trend.

shorter; less

The exponential smoothing forecasting model uses the following data, except:

smoothing constant delta

You generally use medium-term forecasts for planning a _______ for meeting demand over the next six months to a year and a half

strategy

Long-term forecasting models detect general trends and are especially useful in identifying major _______ ________

turning, points

When deciding which forecasting model to use, a firm should consider all of the following except:

weather

When calculating a multiplicative seasonal index, what mathematical operator is used to relate the trend and seasonal factor?

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