OP Mgmt Ch 3

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

1.0

Which of the following is not a step in the forecasting process?

Eliminate all assumptions

Time-series techniques involve the identification of explanatory variables that can be used to predict future demand. (Hint: Time-series attempt to use past experience to predict the future)

FALSE (Associative forecasts involve identifying explanatory variables)

Forecasts based on time-series (historical) data are referred to as associative forecasts. (Hint: associative forecasts use predictor variables)

FALSE(Associative forecasts involve identifying explanatory variables)

When new products or services are introduced, focus "best recent performance" forecasting models are an attractive option.

FALSE(Because focus forecasting models depend on historical data, they're not so attractive for newly introduced products or services)

Once accepted by managers, forecasts should be held firm regardless of new input since many plans have been made using the original forecast

FALSE(Flexibility to accommodate major changes is important to good forecasting)

A consumer survey is an easy and sure way to obtain accurate input from future customers since most people enjoy participating in surveys

FALSE(Most people do not enjoy participating in surveys)

The naive forecast is limited in its application to series that reflect no trend or seasonality.

FALSE(When a trend or seasonality is present, the naive forecast is more limited in its application)

Which of the following is a potential shortcoming of using sales force opinions in demand forecasting?

Members of the sales force can have difficulty distinguishing between what customers would like to do and what they actually will do.

Moving average forecasting techniques do the following

Smooth variations in the data

An advantage of a weighted moving average is that recent actual results can be given more importance than what occurred a while ago.

TRUE

Exponential smoothing is a form of weighted averaging

TRUE

Forecasting techniques generally assume an existing causal system that will continue to exist in the future

TRUE

Forecasts based on an average tend to exhibit less variability than the original data.

TRUE

Forecasts help managers both to plan the system itself and to provide valuable information for using the system.

TRUE

Forecasts of future demand are used by operations people to plan capacity.

TRUE

In exponential smoothing, an alpha of 1.0 will generate the same forecast that a naive forecast would yield.

TRUE

In order to compute seasonal relatives, the trend of past data must be computed or known, which means that for brand-new products this approach cannot be used

TRUE

In order to update a moving average forecast, the values of each data point in the average must be known

TRUE

Organizations that are capable of responding quickly to changing requirements can use a shorter forecast horizon and therefore benefit from more accurate forecasts.

TRUE

The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast. (Hint: The Dephi approach is an iterative process intended to achieve a consensus forecast. As a forecasting tool it is useful for technological forecasting)

TRUE

The naive forecast can serve as a quick and easy standard of comparison against which to judge the cost and accuracy of other techniques.

TRUE

The purpose of the forecast should be established first so that the level of detail, amount of resources, and accuracy level can be understood

TRUE

The shorter the forecast period, the more accurately the forecasts tend to track what actually happens

TRUE

Which of the following would be an advantage of using a sales force composite to develop a demand forecast?

The sales staff is often aware of customers' future plans

Which of the following would tend to decrease forecast accuracy?

a change in the underlying causal system

A forecast based on the previous forecast plus a percentage of the forecast error is:

an exponentially smoothed forecast

One reason for using the Delphi method in forecasting is to:

avoid premature consensus (bandwagon effect

A persistent tendency for forecasts to be greater than or less than the actual values is called:

bias.

Detecting nonrandomness in errors can be done using

control charts

When choosing a forecasting technique, a critical trade-off that must be considered is that between:

cost and accuracy

Which of the following is/are a primary input into capacity, sales, and production planning?

demand forecasts

The two general approaches to forecasting are:

qualitative and quantitative.

Which phrase most closely describes the Delphi technique?

series of questionnaires

Which of the following helps improve supply chain forecasting performance?

sharing forecasts or demand data across the supply chain

The more novel a new product or service design is, the more forecasters have to rely on:

subjective estimates

The forecasting method which uses anonymous questionnaires to achieve a consensus forecast is:

the Delphi method

The primary difference between seasonality and cycles is

the duration of the repeating patterns

Which of the following is not a type of judgmental (qualitative) forecasting?

time series analysis

Which is not a characteristic of exponential smoothing?

weights each historical value equally

Which of the following is the most valuable piece of information the sales force can bring into forecasting situations?

what customers are most likely to do in the future