Question 1

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 B

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 A

Question 3

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

Accepted Answer

A) Four weeks or less 
B) More than three months 
C) Six months or more 
D) Less than three months 
E) One year 
A) Four weeks or less 
B) More than three months 
C) Six months or more 
D) Less than three months 
E) One year D

Question 4

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 5

The exponential smoothing method requires which of the following data to forecast the future?

Accepted Answer

A) The most recent forecast for the past year 
B) Precise actual demand for the past several yearsyear 
C) The value of the smoothing constant delta 
D) Overall industry demand data 
E) Tracking valuesA, B and C 
A) The most recent forecast for the past year 
B) Precise actual demand for the past several yearsyear 
C) The value of the smoothing constant delta 
D) Overall industry demand data 
E) Tracking valuesA, B and C

Question 6

In causal relationship forecasting, leading indicators are used to forecast occurrences.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) Three months or longer 
B) Six months or longer 
C) One year or longer 
D) Two years or longer 
E) Ten years or longer 
A) Three months or longer 
B) Six months or longer 
C) One year or longer 
D) Two years or longer 
E) Ten years or longer

Question 8

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 9

A company wants to forecast demand using the weighted moving average.If the company uses three prior yearly sales values , and we want to weight year 2011 2014 at 30 percent, year 2012 2015 at 30 percent, and year 2013 2016 at 40 percent, which of the following is the weighted moving average forecast for year 20142017?

Accepted Answer

A) 170 
B) 168 
C) 158 
D) 152 
E) 146 
A) 170 
B) 168 
C) 158 
D) 152 
E) 146

Question 10

As a consultant, you have been asked to generate a unit demand forecast for a product for year 2017 using exponential smoothing.You have data for the past three years and the forecast and the actual are the same for the first period of your data (3 years ago).Which of the following is most accurate?

Accepted Answer

A) Forecast for year 2017 will be higher than the actual for 2016, if your α is close to 1.0 
B) Forecast for 2017 will be between all the actual sales 
C) Exponential smoothing is a type of weighted average forecasting method 
D) B and C 
E) None of the above 
A) Forecast for year 2017 will be higher than the actual for 2016, if your α is close to 1.0 
B) Forecast for 2017 will be between all the actual sales 
C) Exponential smoothing is a type of weighted average forecasting method 
D) B and C 
E) None of the above

Question 11

When forecast errors occur in a normally distributed pattern, the ratio of the mean absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1 standard deviation.

Accepted Answer

A) True 
 B)False

Question 12

A central premise of exponential smoothing is that more recent data are less indicative of the future than data from the distant past.

Accepted Answer

A) True 
 B)False

Question 13

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 these data?

Accepted Answer

A) 2.5 
B) 10 
C) 20 
D) 22.5 
E) 30 
A) 2.5 
B) 10 
C) 20 
D) 22.5 
E) 30

Question 14

It is difficult to identify the trend in time series data.

Accepted Answer

A) True 
 B)False

Question 15

There are no differences in strategic and tactical forecasting.A forecast is a mathematical projection, and its ultimate purpose
should make no difference to the analyst.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

Regression is a functional relationship between two or more correlated variables, where one variable is used to predict another.

Accepted Answer

A) True 
 B)False

Question 20

Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value

Accepted Answer

A) 1,000 
B) 1,030 
C) 1,070 
D) 1,130 
E) 970 
A) 1,000 
B) 1,030 
C) 1,070 
D) 1,130 
E) 970

Exam 18: Forecasting

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

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

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

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

The exponential smoothing method requires which of the following data to forecast the future?

In causal relationship forecasting, leading indicators are used to forecast occurrences.

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

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

When forecast errors occur in a normally distributed pattern, the ratio of the mean absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1 standard deviation.

A central premise of exponential smoothing is that more recent data are less indicative of the future than data from the distant past.

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 these data?

It is difficult to identify the trend in time series data.

There are no differences in strategic and tactical forecasting.A forecast is a mathematical projection, and its ultimate purpose should make no difference to the analyst.

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?

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

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

Regression is a functional relationship between two or more correlated variables, where one variable is used to predict another.

Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value

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