Question 1

A restriction in using linear regression is that it assumes that past data and future projections fall on or near a straight line.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following forecasting methods can be used for short-term forecasting?

Accepted Answer

A)  Simple exponential smoothing 
B)  Delphi technique 
C)  Market research 
D)  Hoskins-Hamilton smoothing 
E)  Serial regression 
A)  Simple exponential smoothing 
B)  Delphi technique 
C)  Market research 
D)  Hoskins-Hamilton smoothing 
E)  Serial regression

Question 3

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?

Accepted Answer

A)  120 
B)  1,600 
C)  1,640 
D)  2,200 
E)  64,000 
A)  120 
B)  1,600 
C)  1,640 
D)  2,200 
E)  64,000

Question 4

A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values , which of the following is the simple moving average forecast for year 2020?

Accepted Answer

A)  100.5 
B)  140.0 
C)  142.5 
D)  145.5 
E)  155.0 
A)  100.5 
B)  140.0 
C)  142.5 
D)  145.5 
E)  155.0

Question 5

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 these data?

Accepted Answer

A)  1 
B)  3 
C)  5 
D)  15 
E)  123 
A)  1 
B)  3 
C)  5 
D)  15 
E)  123

Question 6

Exponential smoothing models are not very accurate.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following forecasting methodologies is considered a time series forecasting technique?

Accepted Answer

A)  Delphi method 
B)  Exponential averaging 
C)  Simple movement smoothing 
D)  Weighted moving average 
E)  Simulation 
A)  Delphi method 
B)  Exponential averaging 
C)  Simple movement smoothing 
D)  Weighted moving average 
E)  Simulation

Question 8

Autocorrelation means that the value expected at any point is highly correlated with its future values.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following forecasting methodologies is considered a qualitative forecasting technique?

Accepted Answer

A)  Simple moving average 
B)  Market research 
C)  Linear regression 
D)  Exponential smoothing 
E)  Multiple regression 
A)  Simple moving average 
B)  Market research 
C)  Linear regression 
D)  Exponential smoothing 
E)  Multiple regression

Question 10

Heavy sales of umbrellas during a rainstorm is an example of which of the following?

Accepted Answer

A)  A trend 
B)  A causal relationship 
C)  A statistical correlation 
D)  A coincidence 
E)  A fad 
A)  A trend 
B)  A causal relationship 
C)  A statistical correlation 
D)  A coincidence 
E)  A fad

Question 11

If a firm produced a standard item with relatively stable demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be in which of the following ranges?

Accepted Answer

A)  5 to 10 percent 
B)  20 to 50 percent 
C)  20 to 80 percent 
D)  60 to 120 percent 
E)  90 to 100 percent 
A)  5 to 10 percent 
B)  20 to 50 percent 
C)  20 to 80 percent 
D)  60 to 120 percent 
E)  90 to 100 percent

Question 12

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. It wants to have a 99.7 percent control limits on its forecasting system. Its most recent tracking signal value is 15. What should be your report to the company?

Accepted Answer

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. 
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.

Question 13

Random errors can be defined as those that cannot be explained by the forecast model being used.

Accepted Answer

A) True 
 B)False

Question 14

Trend lines are usually the last things considered when developing a forecast.

Accepted Answer

A) True 
 B)False

Question 15

A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values , which of the following is the simple moving average forecast for year 2020?

Accepted Answer

A)  100.5 
B)  122.5 
C)  133.3 
D)  135.6 
E)  139.3 
A)  100.5 
B)  122.5 
C)  133.3 
D)  135.6 
E)  139.3

Question 16

Decomposition of a time series means identifying and separating the time series data into its components.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not one of the basic types of forecasting?

Accepted Answer

A)  Qualitative 
B)  Time series analysis 
C)  Causal relationships 
D)  Simulation 
E)  Force field analysis 
A)  Qualitative 
B)  Time series analysis 
C)  Causal relationships 
D)  Simulation 
E)  Force field analysis

Question 18

MAD statistics can be used to generate tracking signals.

Accepted Answer

A) True 
 B)False

Question 19

Simple exponential smoothing lags changes in demand.

Accepted Answer

A) True 
 B)False

Question 20

In the weighted moving average forecasting model, the weights must add up to one times the number of data points.

Accepted Answer

A) True 
 B)False

Exam 18: Forecasting

A restriction in using linear regression is that it assumes that past data and future projections fall on or near a straight line.

Which of the following forecasting methods can be used for short-term forecasting?

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 company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values , which of the following is the simple moving average forecast for year 2020?

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 these data?

Exponential smoothing models are not very accurate.

Which of the following forecasting methodologies is considered a time series forecasting technique?

Autocorrelation means that the value expected at any point is highly correlated with its future values.

Which of the following forecasting methodologies is considered a qualitative forecasting technique?

Heavy sales of umbrellas during a rainstorm is an example of which of the following?

If a firm produced a standard item with relatively stable demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be in which of the following ranges?

Random errors can be defined as those that cannot be explained by the forecast model being used.

Trend lines are usually the last things considered when developing a forecast.

A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values , which of the following is the simple moving average forecast for year 2020?

Decomposition of a time series means identifying and separating the time series data into its components.

Which of the following is not one of the basic types of forecasting?

MAD statistics can be used to generate tracking signals.

Simple exponential smoothing lags changes in demand.

In the weighted moving average forecasting model, the weights must add up to one times the number of data points.

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