chapter 3

Question 1

A central premise of exponential smoothing is that more recent data is less indicative of the future than data from the distant past
t/f

Answer 1

false-

Question 2

market research is a quantitative method of forecasting
T/F

Answer 2

false-
market research is used mostly for product research in the sense of looking for new product ideas, likes and dislikes about existing products, which competitive products within a particular class are preferred and so on

Question 3

If the intercept value of a linear regression model is 40, the slope value is 40, and the value of X is 40, which of the following is the resulting forecast value using this model?

Answer 3

1,640

we use the y=a+bx
Y=40+40x40=1640

Question 4

time series forecasting models make predictions about the future based on analysis of past data

Answer 4

true

Question 5

simple exponential smoothing lags changes in demand

Answer 5

true

Question 6

RSFE in forecasting stands for “Reliable safety function error”

Answer 6

false

RSFE stands for running sum of forecast errors

Question 7

which of the following forecasting methodologies is considered a qualitative forecasting technique?

Answer 7

market research

Question 8

As a consultant you have been asked to generate a unit demand forecast for a product for year 2018 using exponential smoothing. The actual demand in year 2017 was 750. The forecast demand in year 2017 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2018 forecast value?

Answer 8

897

Forecast= 960+ 0.3 x(750-960)=897

Question 9

experience and trial error are the simplest ways to choose weights for the weighted moving average forecasting model

Answer 9

true

Question 10

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

Answer 10

true

Question 11

Trend lines are usually the last things considered when developing a forecast

Answer 11

false
-they are the starting point for developing the forecast

Question 12

in a forecast model using simple exponential smoothing the data pattern should remain stationary

Answer 12

• True

Question 13

The weighted moving average forecasting model uses a weighting scheme to modify the effects of individual data points. This is its major advantage over the simple moving average model.

Answer 13

t

Question 14

the value of the smoothing constant alpha in an exponential smoothing model is between 0 and 1

Answer 14

True

Question 15

Which of the following is a possible source of bias error in forecasting?

Answer 15

failing to include the right variables

Question 16

MAD statistics can be used to generate tracking signals

Answer 16

True

Question 17

If a firm produced a product that was experiencing growth in demand, the smoothing constant alpha (Reaction rate to differences) used in an exponential smoothing forecasting model would tend to be which of the following?

Answer 17

b. the more rapid the growth, the higher the percentage

Question 18

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

Answer 18

true

Question 19

Regression is a functional relationship between two or more correlated variables where one or more variables are used to predict a single variables of interest

Answer 19

True .

Question 20

for every forecasting problem there is one best forecasting technique

Answer 20

false

Question 21

which of the following forecasting methods can be used for short term forecasting?

Answer 21

simple exponential smoothing

Question 22

which of the following is not one of the basic forecasting types discussed in the text?

Answer 22

force fields analysis