Chapter 4 Flashcards
T/F: A naive forecast for September sales of a product would be equal to the forecast for August.
False. A naive forecast would be equal to last period’s ACTUAL, not forecasted.
T/F: The forecasting time horizon and the forecasting techniques used tend to vary over the life cycle of a product.
True
T/F: Demand (sales) forecasts serve as inputs to financial, marketing, and personnel planning.
True
T/F: Forecasts of individual products tend to be more accurate than forecasts of product families.
False
T/F: Most forecasting techniques assume that there is some underlying stability in the system.
True
T/F: The sales force composite forecasting method relies on salespersons’ estimates of expected sales.
True
T/F: A time-series model uses a series of past data points to make the forecast.
True
T/F: The quarterly “make meeting” of Lexus dealers is an example of a sales force composite forecast.
True
T/F: Cycles and random variations are both components of time series.
True
T/F: A naive forecast for September sales of a product would be equal to the sales in August.
True
T/F: One advantage of exponential smoothing is the limited amount of record keeping involved.
True
T/F: The larger the number of periods in the simple moving average forecasting method, the greater the method’s responsiveness to changes in demand.
False
T/F: Forecast including trend is an exponential smoothing technique that utilizes two smoothing constants: one for the average level of the forecast and one for its trend.
True
T/F: Mean Squared Error and Coefficient of Correlation are two measures of the overall error of a forecasting model.
False. MSE and MAD are two measures, Coefficient of Correlation is a measure of the strength of relationship between two variables.
T/F: In trend projection, the trend component is the slope of the regression line.
True
T/F: In trend projection, a negative regression slope is mathematically impossible.
False
T/F: Seasonal indexes adjust raw data for patterns that repeat at regular time intervals.
True
T/F: If quarterly seasonal index has been calculated at 1.55 for the Oct-Dec quarter, then raw data for that quarter must be multiplied by 1.55 so that the quarter can be fairly compared to other quarters.
False. You don’t multiply to fairly compare to other quarters, you multiply to get a more accurate forecast.
T/F: The best way to forecast a business cycle is by finding a leading variable.
True
T/F: Linear-regression analysis is a straight-line mathematical model to describe the functional relationships between independent and dependent variables.
True
T/F: The larger the standard error of the estimate, the more accurate the forecasting model.
False, duh
T/F: A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y for every unit of time that passes.
True
T/F: In a regression equation where Y is demand and X is advertising, a coefficient of determination (R^2) of .70 means that 70% of the variance in advertising is explained by demand.
False. It means that 70% of the variation can be determined by the regression equation.
T/F: Demand cycles for individual products can be driven by product life cycles.
True
T/F: If a forecast is consistently greater than (or less than) actual values, the forecast is said to be biased.
True
T/F: Focus forecasting tries a variety of computer models and selects the best one for a particular application.
True
T/F: Many service firms use point-of-sale computers to collect detailed records needed for accurate short-term forecasts.
True
What two numbers are contained in the daily report to the CEO of Walt Disney Parks & Resorts regarding the six Orlando parks?
Yesterday’s forecasted attendance and yesterday’s actual attendance
Using an exponential smoothing with smoothing constant alpha=.20, how much weight would be assigned to the 2nd most recent period?
.16
What are forecasts more accurate for, groups of items or individual items?
Forecasts are more accurate for groups of items
T/F: Forecasts become more accurate with a longer time horizon.
False
One use of short-range forecasts is to determine…
job assignments
Forecasts are usually classified by time horizon into what three categories?
Short-range, medium-range, and long-range
The three major types of forecasts used by business organizations are?
Economic, Technological, and Demand
A forecast with a time horizon of about 3 months to 3 years is typically called a _____-range forecast?
Medium-range
Forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize a _____-range forecast.
Long-range
Which of the following is NOT a step in the forecasting process?
Eliminate any assumptions
What are the two general approaches to forecasting?
Qualitative and Quantitative
Which forecasting method uses three types of participants: decision makers, staff personnel, and respondents?
the Delphi method
Is moving average a qualitative or quantitative forecasting method?
Quantitative
What forecasting model pools the opinions of a group of experts or managers?
Jury of executive opinion model
What behaviors may time series data exhibit?
Trend, random variations, seasonality, cycles
Gradual, long-term movement in time series data is called…
trends
T/F: The analysis of past demand helps predict future demand.
True
Which forecasting technique uses variables such as price and promotional expenditures, which are related to product demand, to predict demand?
Associative models
The fundamental difference between cycles and seasonality is the
duration of repeating patterns
In time series, which of the following cannot be predicted?
Random Fluctuations
What time series model assumes that demand in the next period will be equal to the most recent period’s demand?
Naive Approach
A six-month moving average forecast is better than a three-month moving average forecast if demand…
Is rather stable
Increasing the number of periods in a moving average will accomplish greater smoothing, but at the expense of
responsiveness to changes
Which time series model uses past forecasts and past demand data to generate a new forecast?
Exponential Smoothing
What are the characteristics of exponential smoothing?
Smoothes random variations, easily altered weighting scheme, and minimal data storage requirements
What smoothing constant would make an exponential smoothing forecast equivalent to a naive forecast?
1.0
A forecast based on the previous forecast plus a percentage of the forecast error is an….
exponentially smoothed forecast
