OPMA CH. 3 Part 2

As a consultant you have been asked to generate a unit demand forecast for a product for year 2014 using exponential smoothing. The actual demand in year 2013 was 750. The forecast demand in year 2013 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2014 forecast value? A. 766 B. 813 C. 897 D. 1,023 E. 1,120

C. 897

Which of the following are used to describe the degree of error? A. Weighted moving average B. Regression C. Moving average D. Forecast as a percent of actual E. Mean absolute deviation

E. Mean absolute deviation

A company has a MAD of 10. Its wants to have a 99.7 percent control limits on its forecasting system. It's most recent tracking signal value is 3.1. What can the company conclude from this information? A. The forecasting model is operating acceptably B. The forecasting model is out of control and needs to be corrected C. The MAD value is incorrect D. The upper control value is less than 20 E. It is using an inappropriate forecasting methodology

A

You are using an exponential smoothing model for forecasting. The running sum of the forecast error statistics (RSFE) are calculated each time a forecast is generated. You find the last RSFE to be 34. Originally the forecasting model used was selected because it's relatively low MAD of 0.4. To determine when it is time to re-evaluate the usefulness of the exponential smoothing model you compute tracking signals. Which of the following is the resulting tracking signal? A. 85 B. 60 C. 13.6 D. 12.9 E. 8

A

If you were selecting from a variety of forecasting models based on MAD, which of the following MAD values from the same data would reflect the most accurate model? A. 0.2 B. 0.8 C. 1.0 D. 10.0 E. 100.0

A. 0.2 The smaller the MAD, the better

Which of the following is a possible source of bias error in forecasting? A. Failing to include the right variables B. Using the wrong forecasting method C. Employing less sophisticated analysts than necessary D. Using incorrect data E. Using standard deviation rather than MAD

A. Failing to include the right variables

A company has calculated its running sum of forecast errors to be 500 and its mean absolute deviation is exactly 35. Which of the following is the company's tracking signal? A. Cannot be calculated based on this information B. About 14.3 C. More than 35 D. Exactly 35 E. About 0.07

B

A company hires you to develop a linear regression forecasting model. Based on the company's historical sales information, you determine the intercept value of the model to be 1,200. You also find the slope value is minus 50. If after developing the model you are given a value of X = 10, which of the following is the resulting forecast value using this model? A. - 1,800 B. 700 C. 1,230 D. 1,150 E. 12,000

B

Heavy sales of umbrellas during a rain storm is an example of which of the following? A. A trend B. A causal relationship C. A statistical correlation D. A coincidence E. A fad

B

Which of the following is the portion of observations you would expect to see lying within a plus or minus 2 MAD range? A. 57.04 B. 89.04 C. 98.33 D. 99.86 E. 100.00

B

You are hired as a consultant to advise a small firm on forecasting methodology. Based on your research you find the company has a MAD of 3. Its wants to have a 99.7 percent control limits on its forecasting system. It's most recent tracking signal value is 15. What should be your report to the company? A. The forecasting model is operating acceptably B. The forecasting model is out of control and needs to be corrected C. The MAD value is incorrect D. The upper control value is less than 20 E. The company is using an inappropriate forecasting methodology

B

If the intercept value of a linear regression model is 40, the slope value is 40, and the value of X is 40, which of the following is the resulting forecast value using this model? A. 120 B. 1,600 C. 1,640 D. 2,200 E. 64,000

C

Which of the following is the portion of observations you would expect to see lying within a plus or minus 3 MAD range? A. 57.05 percent B. 88.95 percent C. 98.36 percent D. 99.85 percent E. 100 percent

C

A company has actual unit demand for four consecutive years of 100, 105, 135, and 150. The respective forecasts were 120 for all four years. Which of the following is the resulting MAD value that can be computed from this data? A. 2.5 B. 10 C. 20 D. 22.5 E. 30

C. 20 MAD = [(|A-F|)...] / n MAD = [(|100 - 120|) + (|105 - 120|) + (|135 - 120|) + (|140 - 120|) ] / 4

A company has actual unit demand for three consecutive years of 124, 126, and 135. The respective forecasts for the same three years are 120, 120, and 130. Which of the following is the resulting MAD value that can be computed from this data? A. 1 B. 3 C. 5 D. 15 E. 123

C. 5 MAD = [(|A-F|)...] / n MAD = [(|124 - 120|) + (|126 - 120|) + (|135 - 130|) ] / 3