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Supply Chain BA 339 > CH 3 - Forecasting > Flashcards

CH 3 - Forecasting Flashcards

1
Q

Medium- and longterm forecasts used for decisions related to strategy and estimating aggregate demand

A

Strategic Forecasts

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2
Q

Short-Term forecasts used as input for making day-to-day decisions related to meeting demand

A

Tactical Forecasts

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3
Q

Forecasting can be classified into four basic types:

A
  1. Qualitative
  2. Time Series Analysis
  3. Causal Relationships
    4 Simulation
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4
Q

Based on the idea that data relating to past demand can be used to predict future demand

A

Time Series Analysis

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5
Q

______ techniques are subjective or judgemental and are based on estimates and options.

A

Qualitative

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6
Q

Cyclical factors are more difficult to determine because

A

the time span may be unknown or the cause of the cycle may not be considered

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7
Q

This influence may come from political elections, war, economic conditions, or sociological pressures

A

Cyclical Influence

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8
Q

Caused by chance events

A

Random Variations

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9
Q

Denotes the persistence of occurrence. The value expected at any point is highly correlated with its own past values

A

Autocorrelation

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10
Q

What are the four common types of trends?

A
  1. Linear Trend
  2. S-Curve Trend
  3. Asymptotic Trend
  4. Exponential Trend
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11
Q

A ______ trend is a straight continuous relationship

A

linear

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12
Q

An ______ trend is typical of a product growth and maturity cycle

A

S-Curve

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13
Q

An ______ Trend starts with the highest demand growth at the beginning but then tapers off.

A

Asymptotic

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14
Q

An _______ trend is common in products with explosive growth.

A

Exponential

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15
Q

In Forecasting, short term refers to?

A

Under three months

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16
Q

In Forecasting, medium term refers to?

A

three months to two years

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17
Q

In Forecasting, long term refers to?

A

greater than two years

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18
Q

Short term forecasts are used for ____ decisions

A

tactical

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19
Q

Use of _____ term forecasts for planning a strategy for meeting demand over the next 6 to 18 months

A

Medium

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20
Q

Short term models compensate for ____ ____ and adjust for short term changes

A

Random Variation

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21
Q

Medium term forecasts are useful for capturing _____ effects

A

Seasonal

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22
Q

____ term models detect general trends are useful in identifying major turning points

A

Long

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23
Q

Which forecasting model a firm should choose depends on: (Name 5)

A
  1. Time Horizon to Forecast
  2. Data Availability
  3. Accuracy Required
  4. Size of Forecasting Budget
  5. Availability of Qualified Personnel
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24
Q

Can be useful in removing the random fluctuations for forecasting. Simply calculate the average demand over more recent periods. Each time a new forecast is made, the oldest period is discarded and the newest included.

A

Moving Average

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25
Q

What’s the main disadvantage in calculating a moving average?

A

All individual elements must be carried as data because a new forecast period involves adding new data and dropping the earliest data.

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26
Q

A forecast made with past data where more recent data are given more significance than older data

A

Weighted Moving Average

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27
Q

What’s the simplest ways to choose weights in forecasting?

A

Experience and Trial and Error

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28
Q

Exponential smoothing techniques have become well accepted for six major reasons:

A
  1. It’s surprisingly accurate
  2. It’s relatively easy to formulate
  3. The user can understand how the model works
  4. Little computation is required to use the model
  5. Computer storage requirements are small due to limited use of historical data
  6. Tests for accuracy are easy to compute
29
Q

In the exponential smoothing method, what three pieces of data are needed to forecast the future?

A
  1. The most recent forecast
  2. The actual demand that occured for that forecast period
  3. The smoothing constant alpha
30
Q

The parameter in the exponential smoothing equation that controls the speed of reaction to differences between forecasts and actual demand

A

Smoothing Constant Alpha

31
Q

The exponential smoothing with trend method involves adding a smoothing constant ____ to the equation

A

Delta

32
Q

Exponential smoothing requires that the smoothing constants be given a value between __ and __

A

0, 1

33
Q

A functional relationship between two or more correlated variables

A

Regression

34
Q

A forecasting technique that assumes that past data and future projections fall around a straight line

A

Linear Regression Forecasting

35
Q

Linear regression is useful for ___ ___ forecasting of major occurrences and _____ planning

A

Long Term, Aggregate

36
Q

Linear regression is used both for ___ ____ forecasting and for _____ relationship forecasting

A

Time Series, Casual

37
Q

When the dependent variable changes as a result of time, it is….

A

Time Series Analysis

38
Q

If one variable changes because of the change in another variable, this is…

A

Casual Relationship

39
Q

Chronologically ordered data that may contain one or more components of demand

A

Time Series

40
Q

_____ of a time series means identifying and separating the time series data into components

A

Decomposition

41
Q

The seasonal factor is constant no matter what the trend or average amount is. This is reffered to?

A

additive seasonal variation

42
Q

The trend is multiplied by the seasonal index

A

Multiplicative seasonal variation

43
Q

Period of the year characterized by some particular activity

A

Seasonal

44
Q

Indicates other than annual recurrent periods of repetitive activity

A

Cyclical

45
Q

The difference between what actually occurred and what was forecasted

A

Forecast Error

46
Q

____ ____ occur when a consistent mistake is made in a forecast

A

Bias Errors

47
Q

Sources of ____ include the failure to include the right variables, the use of the wrong relationships among variables, employing the wrong trend line, a mistaken shift in the seasonal demand from where it normally occurs, and the existence of some undetected secular trend

A

Bias

48
Q

____ ____ can be defined as those that cannot be explained by the forecast model being used

A

Random Errors

49
Q

The average forecast error using absolute values of the error of each past forecast

A

Mean Absolute Deviation

50
Q

_____ is computed using the differences between the actual demand and the forecast demand without regard to sign.

A

MAD (Mean Absolute Deviation)

51
Q

1 MAD is approximately ___ standard deviation

A

0.80

52
Q

This measure gauges the error relative to the demand as a percentage

A

MAPE (Mean Absolute Percent Error)

53
Q

Measurement that indicates whether the forecast average is keeping pace with any genuine upward or downward changes in demand

A

Tracking Signal (TS)

54
Q

____ _____ Forecasting involves using independent variables other than time to predict future demand.

A

Causal Relationship

55
Q

Forecasting method where a number of variables are considered, together with the effects of each on the item of interest

A

Multiple Regression Analysis

56
Q

_______ forecasting techniques generally take advantage of the knowledge of experts and require much judgment.

A

Qualitative

57
Q

What are some qualitative forecasting techniques? (name 4)

A
  1. Market Research
  2. Panel Consensus
  3. Historical Analogy
  4. Delphi Method
58
Q

Firms often hire outside companies that specialize in ____ ____ to conduct this type of forecasting

A

Market Research

59
Q

____ ____ is used mostly for product research in a sense of looking for new product ideas, likes and dislikes about existing products, which competitive products within a particular class are preferred.

A

Market Research

60
Q

In a ____ ____ the idea that two heads are better than one is extrapolated to the idea that a panel of people from a variety of positions can develop a more reliable forecast than a narrower group.

A

Panel Consensus

61
Q

____ Forecasts are developed through open meetings with a free exchange of ideas from all levels of management and individuals.

A

Panel

62
Q

In trying to forecast demand for a new product, an ideal situation would be where an existing product or generic product could be used as a model.

A

Historical Analogy

63
Q

Under panel consensus, a statement/opinion of a higher level person will likely weight more than a lower level person. Worst case is where lower level people feel threatened and won’t contribute their true beliefs. To prevent this, the ___ ____ conceals the identify of the individuals.

A

Delphi Method

64
Q

Web-based tool used to coordinate demand forecasting, production and purchase planning, and inventory replenishment between supply chain trading partners.

A

Collaborative Planning, Forecasting, and Replenishment (CPFR)

65
Q

____ applications to date are largely focused on the food, apparel, and general merchandise industries

A

CPFR

66
Q

CPFR uses a cyclic and iterative approach to derive consensus supply chain forecasts. It consists of the following five steps:

A
  1. Creation of a front-end partnership agreement
  2. Joint Business Planning
  3. Development of demand forecasts
  4. Forecast sharing
  5. Inventory replenishment
67
Q

Name the five steps in decompositioning a time series forecast

A
  1. Determine Seasonal Factor
  2. Deseasonlize Original Data
  3. Develop regression line for deseasonalized data
  4. Project regression line over forecast period
  5. Adjust regression line for seasonal factor
68
Q

A tracking signal of __ or higher indicates a good forecast

A

5

Supply Chain BA 339 (6 decks)

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