Business Forecasting

Question 1

Forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize a

Answer 1

long-range horizon

Question 2

A naïve forecast for September sales of a product would be equal to the forecast for August.

Answer 2

False

Question 3

Forecasts

Answer 3

are rarely perfect.

Question 4

The two general approaches to forecasting are

Answer 4

qualitative and quantitative.

Question 5

The forecasting time horizon and the forecasting techniques used tend to vary over the life cycle of
a product.

Answer 5

True

Question 6

Demand (sales) forecasts serve as inputs to financial, marketing, and personnel planning

Answer 6

True

Question 7

Linear-regression analysis is a straight-line mathematical model to describe the functional relationships between independent and dependent variables

Answer 7

True

Question 8

Forecast including trend is an exponential smoothing technique that utilizes two smoothing constants: one for the average level of the forecast and one for its trend.

Answer 8

True

Question 9

John’s House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous month’s demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 1000 pancakes in May, 2200 pancakes in June, and 3000 pancakes in July, what should be the forecast for August?

Answer 9

2511

Question 10

In trend projection, the trend component is the slope of the regression equation

Answer 10

True

Question 11

Which of the following is not a type of qualitative forecasting?

Answer 11

Moving average

Question 12

The three major types of forecasts used by business organizations are

Answer 12

economic, technological, and demand

Question 13

The forecasting model that pools the opinions of a group of experts or managers is known as the

Answer 13

jury of exponential model

Question 14

Which of the following is not present in a time series?

Answer 14

Operational variations

Question 15

A time-series model uses a series of past data points to make the forecast.

Answer 15

True

Question 16

Most forecasting techniques assume that there is some underlying stability in the system.

Answer 16

True

Question 17

The sales force composite forecasting method relies on salespersons’ estimates of expected sales.

Answer 17

True

Question 18

The best way to forecast a business cycle is by finding a leading variable.

Answer 18

True

Question 19

Forecasts of individual products tend to be more accurate than forecasts of product families.

Answer 19

False

Question 20

One advantage of exponential smoothing is the limited amount of record keeping involved.

Answer 20

True

Question 21

Time series data may exhibit which of the following behaviors?
a. trend b. random variations c. seasonality d. cycles

Answer 21

They may exhibit all of the following.

Question 22

Which of the following is not a step in the forecasting process?

a. Determine the use of the forecast
b. Eliminate any assumptions
c. Determine the time horizon
d. Select forecasting model

Answer 22

b. Eliminate any assumptions

Question 23

Seasonal indexes adjust raw data for patterns that repeat at regular time intervals.

Answer 23

True

Question 24

Forecasts are usually classified by time horizon into three categories

Answer 24

short-range, medium-range, and long-range

Question 25

Which of the following statements about time series forecasting is true?

a. It is based on the assumption that future demand will be the same as past demand
b. It makes extensive use of the data collected in the qualitative approach
c. The analysis of past demand helps predict future demand
d. Because it accounts for trends, cycles, and seasonal patterns, it is more powerful than causal forecasting.

Answer 25

c. The analysis of past demand helps predict future demand