Question 1

In exponential smoothing, it is desirable to use a higher smoothing constant when forecasting demand for a product experiencing high growth.

Accepted Answer

A) True 
 B)False

Question 2

Exponential smoothing models can be very complex.

Accepted Answer

A) True 
 B)False

Question 3

A moving average can be useful for forecasting but it introduces random fluctuations into the forecast that must be dealt with.

Accepted Answer

A) True 
 B)False

Question 4

The greater the ability of a forecasting model to react quickly to changes in demand, the less accurate the forecast needs to be.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following forecasting methods is very dependent on selection of the right individuals who will judgmentally be used to actually generate the forecast?

Accepted Answer

A)  Time series analysis 
B)  Simple moving average 
C)  Weighted moving average 
D)  Delphi method 
E)  Panel consensus 
A)  Time series analysis 
B)  Simple moving average 
C)  Weighted moving average 
D)  Delphi method 
E)  Panel consensus

Question 6

The value of the smoothing constant alpha in an exponential smoothing model is between 0 and 1.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is the percentage of observations you would expect to see lying within a plus or minus 2 MAD range?

Accepted Answer

A)  57.04 percent 
B)  89.04 percent 
C)  98.33 percent 
D)  99.86 percent 
E)  100.00 percent 
A)  57.04 percent 
B)  89.04 percent 
C)  98.33 percent 
D)  99.86 percent 
E)  100.00 percent

Question 8

Because the factors governing demand for products are very complex, all forecasts of demand contain error.

Accepted Answer

A) True 
 B)False

Question 9

Cyclical influences on demand may come from occurrences such as political elections, war, or economic conditions.

Accepted Answer

A) True 
 B)False

Question 10

Linear regression works both for time series and causal relationship forecasting.

Accepted Answer

A) True 
 B)False

Question 11

In business forecasting, what is usually considered a medium-term time period?

Accepted Answer

A)  Six weeks to one year 
B)  Three months to two years 
C)  One to five years 
D)  One to six months 
E)  Six months to six years 
A)  Six weeks to one year 
B)  Three months to two years 
C)  One to five years 
D)  One to six months 
E)  Six months to six years

Question 12

Market research is a quantitative method of forecasting.

Accepted Answer

A) True 
 B)False

Question 13

We usually associate the word "seasonal" with recurrent periods of repetitive activity that happen on other than an annual cycle.

Accepted Answer

A) True 
 B)False

Question 14

A company wants to generate a forecast for unit demand for year 2020 using exponential smoothing. The actual demand in year 2019 was 120. The forecast demand in year 2019 was 110. Using these data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2020 forecast value?

Accepted Answer

A)  100 
B)  110 
C)  111 
D)  114 
E)  120 
A)  100 
B)  110 
C)  111 
D)  114 
E)  120

Question 15

Random errors in forecasting occur when an undetected secular trend is not included in a forecasting model.

Accepted Answer

A) True 
 B)False

Question 16

A company has a MAD of 10. It wants to have a 99.7 percent control limit on its forecasting system. Its most recent tracking signal value is 3.1. What can the company conclude from this information?

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)  It 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)  It is using an inappropriate forecasting methodology.

Question 17

Exponential smoothing models require minimal data storage.

Accepted Answer

A) True 
 B)False

Question 18

With a simple moving average, the number of periods used has a major impact on its ability to smooth out fluctuation but does not have much impact on its forecasting ability.

Accepted Answer

A) True 
 B)False

Question 19

Exponential smoothing is always the best and most accurate of all forecasting models.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following considerations is not a factor in deciding which forecasting model a firm should choose?

Accepted Answer

A)  Time horizon to forecast 
B)  Product 
C)  Accuracy required 
D)  Data availability 
E)  Analyst availability 
A)  Time horizon to forecast 
B)  Product 
C)  Accuracy required 
D)  Data availability 
E)  Analyst availability

Exam 18: Forecasting

In exponential smoothing, it is desirable to use a higher smoothing constant when forecasting demand for a product experiencing high growth.

Exponential smoothing models can be very complex.

A moving average can be useful for forecasting but it introduces random fluctuations into the forecast that must be dealt with.

The greater the ability of a forecasting model to react quickly to changes in demand, the less accurate the forecast needs to be.

Which of the following forecasting methods is very dependent on selection of the right individuals who will judgmentally be used to actually generate the forecast?

The value of the smoothing constant alpha in an exponential smoothing model is between 0 and 1.

Which of the following is the percentage of observations you would expect to see lying within a plus or minus 2 MAD range?

Because the factors governing demand for products are very complex, all forecasts of demand contain error.

Cyclical influences on demand may come from occurrences such as political elections, war, or economic conditions.

Linear regression works both for time series and causal relationship forecasting.

In business forecasting, what is usually considered a medium-term time period?

Market research is a quantitative method of forecasting.

We usually associate the word "seasonal" with recurrent periods of repetitive activity that happen on other than an annual cycle.

Random errors in forecasting occur when an undetected secular trend is not included in a forecasting model.

A company has a MAD of 10. It wants to have a 99.7 percent control limit on its forecasting system. Its most recent tracking signal value is 3.1. What can the company conclude from this information?

Exponential smoothing models require minimal data storage.

With a simple moving average, the number of periods used has a major impact on its ability to smooth out fluctuation but does not have much impact on its forecasting ability.

Exponential smoothing is always the best and most accurate of all forecasting models.

Which of the following considerations is not a factor in deciding which forecasting model a firm should choose?

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