MGT 033 Ch 5

Question 1

This refers to the practice of predicting what will happen in the future by taking into consideration events in the past and present.

Answer 1

Forecasting

Question 2

This is the process of making predictions of the future based on past and present data.

Answer 2

Forecasting

This is most commonly by analysis of trends.

Question 3

What term is used for more general estimates, such as the number of times floods will occur over a long period.

Answer 3

Prediction

Question 3

This tends to be completed at high levels in the organization.

Answer 3

Long term forecasting
(The time frame is generally considered longer than 2 years into the future.)

Question 3

What are central to forecasting and prediction

Answer 3

Risk and uncertainty

Question 4

This tends to be several months up to 2 years into the future and is also referred to as

Answer 4

Medium term forecasting/Intermediate Term

Question 5

This forecasting is daily up to months in the future. These forecasts are used for operational decision making such as inventory planning, ordering and scheduling of the workforce.

Answer 5

Short term forecasting

Question 6

This forecasting technique category is subjective, based on the opinion and judgment of consumers and experts; they are appropriate when past data are not available. They are usually applied to intermediate- or long-range decisions.

Answer 6

Qualitative Forecasting

Question 7

In this type of Qualitative Forecasting, groups of high-level executives will often assume responsibility for the forecast. They will collaborate to examine market data and look at future trends for the business. Often, they will use statistical models as well as market experts to arrive at a forecast.

Answer 7

Executive Judgement (Top Down)

Question 8

In this type of Qualitative Forecasting, those persons most close to the customers. Their opinions are of high value. Often the sales force personnel are asked to give their future projections for their area or territory. Once all of those are reviewed, they may be combined to form an overall forecast for district or region.

Answer 8

Sales Force Opinions (Bottom up)

Question 9

In this type of Qualitative Forecasting, a group of experts are recruited to participate in a forecast. The administrator of the forecast will send out a series of questionnaires and ask for inputs and justifications. These responses will be collated and sent out again to allow respondents to evaluate and adjust their answers. A key aspect of the this method is that the responses are anonymous, respondents do not have any knowledge about what information has come from which sources. That permits all of the opinions to be given equal consideration. The set of questionnaires will go back and forth multiple times until a forecast is agreed upon.

Answer 9

Delphi Method

Question 10

In this type of Qualitative Forecasting, some organizations will employ market research firms to solicit information from consumers regarding opinions on products and future purchasing plans.

Answer 10

Market Surveys

Question 11

Originally designed for classification tasks, _____ can also be applied to regression (and thus forecasting) problems. They operate by finding the optimal boundary that separates different classes of data, and in the context of forecasting, _____ aim to find the function that best fits the data.

Answer 11

Support Vector Machines (SVM)

Question 11

This is consistent upward or downward movement of the demand. This may be related to the product’s life cycle.

Answer 11

Trend

Question 11

In this type of Quantitative Forecasting, some forecasting methods try to identify the underlying factors that might influence the variable that is being forecast. For example, including information about climate patterns might improve the ability of a model to predict umbrella sales.

Answer 11

Causal (Econometric) Forecasting Methods (Degree)

Question 12

This is a pattern in the data that tends to last more than one year in duration. Often, they are related to events such as interest rates, the political climate, consumer confidence or other market factors.

Answer 12

Cycle

Question 12

Often demand can be influenced by an event or series of events that are not expected to be repeated in the future. Examples might include an extreme weather event, a strike at a college campus, or a power outage.

Answer 12

Irregular variations

Question 12

Many products have a ______ pattern, generally predictable changes in demand that are recurring every year. Fashion products and sporting goods are heavily influenced by _______.

Answer 12

Seasonal

Question 13

This method is a time-series forecasting model that provides estimates about future revenues by taking into consideration past data and trends.

For this type of model, it’s important to find the growth rate of sales, which will be implemented in the calculations.

Answer 13

Straight-line method

Forecasting the closing price of a stock each day.
Forecasting product sales in units sold each day for a store.
Forecasting unemployment for a state each quarter.
Forecasting the average price of gasoline each day.

Question 13

These methods use historical data as the basis of estimating future outcomes.

Answer 13

Time Series Methods

Question 13

The simplest forecasting method;
This method of forecasting may often be used as a benchmark in order to evaluate and compare other forecast methods.

Answer 13

Naïve Method

Question 13

These are are the unexplained variations in demand that remain after all other factors are considered. Often this is referred to as noise.

Answer 13

Random variations

Question 13

In this method we take the average of the last “n” periods and use that as the forecast for the next period. The value of “n” can be defined by the management in order to achieve a more accurate forecast. For example, a manager may decide to use the demand values from the last four periods (i.e., n = 4) to calculate the 4-period moving average forecast for the next period.

Answer 13

Simple Moving Average

Question 14

This method uses a combination of the last actual demand and the last forecast to produce the forecast for the next period.

Answer 14

Exponential Smoothing

Question 14

A type of machine learning algorithm that can be used to improve the accuracy of other forecasting models. They work by iteratively adding new models to the ensemble, each of which focuses on correcting the errors of the previous models.

Answer 14

Gradient boosting machines

Question 15

These are rapidly revolutionizing the field of forecasting in operations management.
These techniques offer a number of advantages over traditional forecasting methods, such as the ability to learn from complex data patterns and to forecast nonlinear relationships

Answer 15

Machine Learning and AI Models

Question 15

These a computational models inspired by the human brain’s structure, consist of interconnected nodes that process and transmit data.

Answer 15

Neural Networks and Deep Learning Methods