OSCM 306 - Ch3 Forecasting
Put the steps of the forecasting process in the correct order;
1. determine the purpose of the forecast 2. establish a time horizon 3. obtain, clean, and analyze appropriate data 4. select a forecasting technique 5. make the forecast 6. monitor the forecast errors
What is true about forecast errors?
1. forecast error is the difference between the actual and predicted values in a given period 2. negative errors occur when the forecast is to high 3. positive errors occur when the forecast is to low
What are the good elements of good forecasts?
1. forecasts should be reliable 2.forecasts should be cost effective 3. should be easy to understand and use
What is true about forecasts?
1. it is assumed that any patterns or casual systems that were in place in the past will continue in future. 2. The farther into the future we try to forecast, the less accurate the forecast becomes. 3. There will generally be some inaccuracy in the forecast i.e. the actual values will differ.
What are true statements about simple linear regression?
1. it is important to plot the data to see if a linear model is appropriate 2. you need atleast 20 observations 3. it applies only when one predictor variable is used 4. all data points carry equal weight 5. if the correlation is small, the predictor variable is not of much value and another variable may be better
What are two disadvantages of the moving average forecast?
1. potential loss of information of less recent values by decreasing the number of values 2. all the values of the average are weighted equally
What 3 things should be taken into account when choosing a forecasting technique?
1. the availability of data 2. the accuracy of the method 3. the type of data
What is the MSE formula?
= (actual t - forecast t) ^2 / n-1
Which of the following is true about forecasting approaches?
Associative models use explanatory variables to predict the future, qualitative forecasts allow personal opinions to be included in the forecast.
Correlation measures:
Both the strength and direction of the relationship between two variables.
Which of the following statements about the standard error of the estimate is true?
It measures the scatter of the data points around the line.
What is MAD?
MAD represents the average absolute forecast error.
What forecasting approaches are quantitative? What forecasting approaches qualitative?
Quantitative = time series, associative Qualitative = Judgmental, surveys
Which of the following statements about correlation is / are true?
The closer to +1, the stronger the relationship is. A correlation > 0 indicates a positive relationship. The closer to -1 the stronger the relationship is .
Which of the following is true about seasonal relative?
The seasonal % in the multiplicative model are referred to as seasonal relatives, A seasonal relative of 1.25 indicates that the period is 25% above the average.
What is correct interpretation of A and B in the trend equation F=a+bt
a is the intercept, b the slope of the line
What is MAPE?
average absolute percent error
What are the advantages of the moving average forecast?
easy to understand, easy to compute, smooths out random variation making patters more evident
A value of .25 or less of r^2 indicates a ______ predictor. A value between .25 and .8 indicates a ______ predictor.
good, moderate
Short term forecasts pertain to ongoing __________. Long-term forecasts are an important _________ planning tool.
operations, strategic
r^2 measures the ______ of variation in the values of the ______ variable that is "explained" by the ______ variable.
percentage, y, independent variable
The essence of associative techniques is the development of an equation that summarizes the effects of
predictor variables.
In time-series data, _____ are regularly repeating upward or downward movements in series values that can be tired to recurring events.
seasonal variations
Time series data is a ______ - _________ sequence of observations taken at regular intervals.
time - ordered
With respect to the patterns formed by time-series data, ______ refers to a long-term upward or downward movement in the data?
trend
Which of the following is the correct equation for the least squares regression line?
yc = a + bx where yc = Predicted (dependent) variable x = Predictor (independent) variable b = Slope of the line
What are the disadvantages of consumer surveys?
1. consumer opinion may be temporarily influenced by outside factors like sales pitches 2. it is difficult to get a representative sample 3. a considerable amount of knowledge is required to correctly interpret the results for valid information
What is the correct formula to determine the upper control limit of a control chart to monitor the forecast.
0+x = square root MSE
Which of the following about naive forecasting is true?
1. Naive forecasts can be used with stable time series, with seasonal variations, or with trends. 2. Naive forecasts are easy to understand. 3. Naive forecasts use a single previous value to forecast a future value.
The seasonal relative, also know as the seasonal ________, is the seasonal % applied in the _______ model.
index, multiplicative