Question 1

A tracking signal (TS) can be calculated using the arithmetic sum of forecast deviations divided by the MAD.

Accepted Answer

A) True 
 B)False

Question 2

In most cases, demand for products or services can be broken into several components.Which of the following is considered a component of demand?

Accepted Answer

A) Cyclical elements 
B) Future demand 
C) Past demand 
D) Inconsistent demand 
E) Level demand 
A) Cyclical elements 
B) Future demand 
C) Past demand 
D) Inconsistent demand 
E) Level demand

Question 3

Linear regression is not useful for aggregate planning.

Accepted Answer

A) True 
 B)False

Question 4

A time series is defined in the text as chronologically ordered data that may contain one or more components of demand variation: trend, seasonal, cyclical, autocorrelation, and random.

Accepted Answer

A) True 
 B)False

Question 5

In a forecasting model using simple exponential smoothing, the data pattern should remain stationary.

Accepted Answer

A) True 
 B)False

Question 6

In most cases, demand for products or services can be broken down into several components.Which of the following is not considered a component of demand?

Accepted Answer

A) Average demand for a period 
B) A trend 
C) Seasonal elements 
D) Past data 
E) Autocorrelation 
A) Average demand for a period 
B) A trend 
C) Seasonal elements 
D) Past data 
E) Autocorrelation

Question 7

Qualitative forecasting techniques generally take advantage of the knowledge of experts and therefore do not require much judgment.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following forecasting methods uses executive judgment as its primary component for forecasting?

Accepted Answer

A) Historical analogy 
B) Time series analysis 
C) Panel consensus 
D) Market research 
E) Linear regression 
A) Historical analogy 
B) Time series analysis 
C) Panel consensus 
D) Market research 
E) Linear regression

Question 9

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 10

In most cases, demand for products or services can be broken into several components.Which of the following is considered a component of demand?

Accepted Answer

A) Forecast error 
B) Autocorrelation 
C) Previous demand 
D) Consistent demand 
E) Repeat demand 
A) Forecast error 
B) Autocorrelation 
C) Previous demand 
D) Consistent demand 
E) Repeat demand

Question 11

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?

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.0 
D) 10.0 
E) 100.0 
A) 0.2 
B) 0.8 
C) 1.0 
D) 10.0 
E) 100.0

Question 12

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 13

As a consultant, you have been thinking about choosing the "right" alpha (smoothing constant) for forecasting using exponential smoothing.Which of the following is most accurate about alpha?

Accepted Answer

A) If alpha is high, speed of reaction to changes in actually low. 
B) If a firm produces standard product with relatively stable demand, alpha should be small. 
C) Products experiencing growth should be assigned higher alpha value. 
D) Alpha could be more than 1.0, and in this case (1-alpha) will become negative to make up for it. 
E) B and C 
A) If alpha is high, speed of reaction to changes in actually low. 
B) If a firm produces standard product with relatively stable demand, alpha should be small. 
C) Products experiencing growth should be assigned higher alpha value. 
D) Alpha could be more than 1.0, and in this case (1-alpha) will become negative to make up for it. 
E) B and C

Question 14

As a consultant, you have been asked to generate a unit demand forecast for a product for year 2014 2017 using exponential smoothing.The actual demand in year 2013 2016 was 750.The forecast demand in year 2013 2016 was 960.Using these data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2014 2017 forecast value?

Accepted Answer

A) 766 
B) 813 
C) 897 
D) 1,023 
E) 1,120 
A) 766 
B) 813 
C) 897 
D) 1,023 
E) 1,120

Question 15

In general, which forecasting time frame is best to detect general trends?

Accepted Answer

A) Short-term forecasts 
B) Quick-time forecasts 
C) Long-range forecasts 
D) Medium-term forecasts 
E) Rapid-change forecasts 
A) Short-term forecasts 
B) Quick-time forecasts 
C) Long-range forecasts 
D) Medium-term forecasts 
E) Rapid-change forecasts

Question 16

In the simple exponential smoothing forecasting model, you need at least 30 observations to set the smoothing constant alpha.

Accepted Answer

A) True 
 B)False

Question 17

A company wants to forecast demand using the simple moving average.The company uses four positive prior yearly (2013, 2014, 2105 and 2016) sales values.All yearly sales figures are unique (no repetitions).Which of the following is most accurate about the moving average forecast for year 2017?

Accepted Answer

A) Has to be smaller than at least one of the four yearly sales figures. 
B) Has to be larger than at least one of the four yearly sales figures. 
C) Has to be between the smallest and largest yearly sales figures. 
D) Has to greater than all four yearly sales figures. 
E) A, B and C only 
A) Has to be smaller than at least one of the four yearly sales figures. 
B) Has to be larger than at least one of the four yearly sales figures. 
C) Has to be between the smallest and largest yearly sales figures. 
D) Has to greater than all four yearly sales figures. 
E) A, B and C only

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 18: Forecasting

A tracking signal (TS) can be calculated using the arithmetic sum of forecast deviations divided by the MAD.

In most cases, demand for products or services can be broken into several components.Which of the following is considered a component of demand?

Linear regression is not useful for aggregate planning.

A time series is defined in the text as chronologically ordered data that may contain one or more components of demand variation: trend, seasonal, cyclical, autocorrelation, and random.

In a forecasting model using simple exponential smoothing, the data pattern should remain stationary.

In most cases, demand for products or services can be broken down into several components.Which of the following is not considered a component of demand?

Qualitative forecasting techniques generally take advantage of the knowledge of experts and therefore do not require much judgment.

Which of the following forecasting methods uses executive judgment as its primary component for forecasting?

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?

In most cases, demand for products or services can be broken into several components.Which of the following is considered a component of demand?

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?

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?

As a consultant, you have been thinking about choosing the "right" alpha (smoothing constant) for forecasting using exponential smoothing.Which of the following is most accurate about alpha?

In general, which forecasting time frame is best to detect general trends?

In the simple exponential smoothing forecasting model, you need at least 30 observations to set the smoothing constant alpha.

A company wants to forecast demand using the simple moving average.The company uses four positive prior yearly (2013, 2014, 2105 and 2016) sales values.All yearly sales figures are unique (no repetitions).Which of the following is most accurate about the moving average forecast for year 2017?

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

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

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

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