Chapter 3

Question 1

A ___ is an estimate about the future value of a variable - such as demand

Answer 1

Forecast

Question 2

The primary goal of operations management is to match supply to ____

Answer 2

Demand

Question 3

Short-term forecasts pertain to ____

Answer 3

ongoing operations

Question 4

Long-term forecasts pertain to ___

Answer 4

New products, equipment, facilities, etc

Question 5

What are two uses for forecasts?

Answer 5

1) Plan the system
2) Plan the use of the system

Question 6

Planning the system generally involves _____

Answer 6

Long-range plans about the types of products and services to offer

Question 7

Planning the use of the system refers to _____

Answer 7

Short-range and intermediate range planning

Ex: Planning inventory, workforce levels

Question 8

Forecasting techniques generally assume ____

Answer 8

That the same underlying causal system that existed in the past will continue to exist in the future

Question 9

What are the 7 Elements of a good forecasts?

Answer 9

1) Timely
2) Accurate
3) Reliable
4) Meaningful units
5) In Writing
6) Simple
7) Cost-Effective

Question 10

What are the 6 steps in the forecasting process?

Answer 10

1) Determine the purpose
2) Establish a time horizon
3) Obtain/clean appropriate data
4) Select a forecast technique
5) Make the forecast
6) Monitor the errors

Question 11

____ rely on analysis of subjective inputs obtained from sources such as surveys, sales staff, or panels of experts

Answer 11

Judgmental forecasts

Question 12

___ simply attempt to protect past experience into the future - using historical data

Answer 12

Time-series forecasts

Question 13

___ use equations that uses explanatory variables to predict future demand

Answer 13

Associative model

Question 14

What are 4 types of Qualitative forecasts?

Answer 14

1) Executive opinions
2) Consumer surveys
3) Sales Staff opinions
4) Expert opinions

Question 15

____ is an iterative process intended to achieve a consensus forecast; involves a series of questionnaires

Answer 15

Delphi Method

Question 16

What are the 5 behaviors of time-series data?

Answer 16

1) Trends
2) Seasonality
3) Cycles
4) Irregular variations
5) Random variations

Question 17

A demand forecast should be based on a time series of past ___ rather than unit sales

Answer 17

Demand

Question 18

A ____ forecast uses a single pervious value of a time series as the basis of a forecast

Answer 18

Naive forecast

Question 19

What are the three techniques for averaging?

Answer 19

1) Moving Average
2) Weighted Moving Average
3) Exponential Smoothing

Question 20

What technique averages a number of recent actual values, updated as new values become available?

Answer 20

Moving Average forecast

Question 21

____ is similar to a moving average, except that it typically assigns more weight to the most recent values in a time series

Answer 21

Weighted Average

Question 22

____ is a weighted average method based on the previous forecast plus a percentage of the forecast error

Answer 22

Exponential smoothing

Question 23

____ involves the use of several forecasting methods all being applied and using the forecasting method that demonstrates the best recent success

Answer 23

Focus forecasting

Question 24

____ models take into account such factors as market potential, attention from mass media, and word of mouth

Answer 24

Diffusion models

Question 25

____ is a variation of simple exponential smoothing can be used when a time series exhibits a linear trend - “Double Smoothing”

Answer 25

Trend-adjusted exponential soothing

Question 26

____ in a time series data are regularly repeating upward or downward movements in series values that can be tied to recurring events

Answer 26

Seasonal variations

Question 27

Seasonal Relative/indexes = _____

Answer 27

Percentage of average or trend

Question 28

To ____ is to remove the seasonal component from the data in order to get a clearer picture of the nonseasonal components

Answer 28

Deseasonalize Data

Question 29

Incorporating seasonality is useful when demand has both ____ and ____

Answer 29

1) Trend (average)
2) Seasonal components

Question 30

____ is a moving average positioned at the center of the data that were used to compute it

Answer 30

Center Moving Average

Question 31

____ are variables that can be used to predict values of the variable of interest

Answer 31

Predictor variables

Question 32

What is the technique for fitting a line to a set of points?

Answer 32

Regression

Question 33

What does the least squares line do?

Answer 33

Minimizes the sum of the squared vertical deviation around the line

Question 34

What is the standard error of estimate?

Answer 34

A measure of the scatter of points around a regression line

Question 35

____ measures the strength and direction of relationship between two variables (-1.00 to 1.00)

Answer 35

Correlation

Question 36

What are the three commonly used measures for summarizing historical errors?

Answer 36

1) MAD (mean absolute deviation)
2) MSE (mean squared error)
3) MAPE (mean absolute percent error)

Question 37

MAD weights all errors ___

Answer 37

Evenly

Question 38

MSE weights errors according to ___

Answer 38

Their squared values

Question 39

MAPE weights according to ____

Answer 39

Relative error

Question 40

____ is the ratio of cumulative forecast error to the corresponding value of MAD, used to monitor a forecast

Answer 40

Tracking signal

Question 41

____ is the persistent tendency for forecasts to be greater or less than the actual values of a time series

Answer 41

Bias

Question 42

The control chart approach is generally ___ to the tracking signal approach

Answer 42

Superior

Question 43

What are the two most important factors when choosing a forecasting technique?

Answer 43

Cost and Accuracy