Ch 3

Question 1

What is forecasting

Answer 1

A demand forecast is

an estimate of demand expected over a future time period

Question 2

Judgemental

Answer 2

• Non-quantitative analysis of subjective inputs

- Considers “soft” information such as human factors, experience, gut instinct

Question 3

Quantitative

Answer 3

Time series models
• Extends historical patterns of numerical data
Associative models
• Create equations with explanatory variables to predict the future

Question 4

Judgemental methods

Answer 4

executive opinions, sales force opinions, consumer surveys, historical analogies, expert opinions

Question 5

What is time series?

Answer 5

Time ordered sequence of observations take at regular intervals of time

Question 6

Time series patterns

Answer 6

Level, trend, seasonality, cycles, irregular variations, random variations

Question 7

Trends

Answer 7

Linear decreasing
Linear increasing
Nonlinear increasing
Nonlinear decreasing

Question 8

Naive methods

Answer 8

Stable, Seasonal, Trend

Question 9

Error

Answer 9

Error = e = Actual - Forecast

Question 10

MAD, MSE, MAPE

Answer 10

MAD = mean absolute deviation
MSE = mean squared error (how close a regression line is to a set of points)
MAPE = mean absolute percentage error (KPI to measure forecast accuracy)