Chapter 3

Question 1

forecast (predictive analytics)

Answer 1

a statement about the future value of a variable of interest

Question 2

two important aspects of forecasts

Answer 2

expected level of demand: the level of demand may be function of some structural variation such as trend or seasonal variation

accuracy: related to the potential size of forecast error

Question 3

features common to all forecasts

Answer 3

• not perfect
• forecasts for group of items are more accurate than those of individual items
• decreases as the forecasting horizon increases

Question 4

forecasts are not perfect:

Answer 4

• differ from predicated values and the presence of randomness precludes a perfect forecast

Question 5

qualitative forecasting

Answer 5

uses soft information such as human factors, personal opinions, hunches

-executive opinions
- salesforce opinions
- consumer surveys
- expert opinions

Question 6

quantitative forecasting

Answer 6

rely on hard data use of historical data or the development of associative methods that attempt to use causal variables to make a forecast

Question 7

Delphi method

Answer 7

an iterative process intended to achieve a consensus

Question 8

time-series

Answer 8

a time ordered sequence of observations taken at regular time intervals

Question 9

associative forecasting techniques

Answer 9

based on the development of an equation that summarizes the effects of predictor variables

Question 10

predictor variables

Answer 10

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

Question 11

control charts

Answer 11

useful for identifying the presence of non-random error in forecasts

Question 12

operations strategy

Answer 12

the better forecasts are, the more able organizations will be to take advantage of future opportunities and reduce potential risks