Beruflich Dokumente
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Forecasting
1. Forecasting techniques generally assume an existing causal system that will continue
to exist in the future.
True
False
2. For new products in a strong growth mode, a low alpha will minimize forecast errors
when using exponential smoothing techniques.
True
False
3. Once accepted by managers, forecasts should be held firm regardless of new input
since many plans have been made using the original forecast.
True
False
4. Forecasts for groups of items tend to be less accurate than forecasts for individual
items because forecasts for individual items don't include as many influencing
factors.
True
False
5. Forecasts help managers both to plan the system itself and to provide valuable
information for using the system.
True
False
False
7. When new products or services are introduced, focus forecasting models are an
attractive option.
True
False
3-1
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8. The purpose of the forecast should be established first so that the level of detail,
amount of resources, and accuracy level can be understood.
True
False
False
10. Time-series techniques involve the identification of explanatory variables that can be
used to predict future demand.
True
False
11. A consumer survey is an easy and sure way to obtain accurate input from future
customers since most people enjoy participating in surveys.
True
False
12. The Delphi approach involves the use of a series of questionnaires to achieve a
consensus forecast.
True
False
13. Exponential smoothing adds a percentage (called alpha) of the last period's forecast
to estimate the next period's demand.
True
False
14. The shorter the forecast period, the more accurately the forecasts tend to track what
actually happens.
True
False
15. Forecasting techniques that are based on time-series data assume that future values
of the series will duplicate past values.
True
False
16. Trend-adjusted exponential smoothing uses double smoothing to add twice the
forecast error to last period's actual demand.
True
False
17. Forecasts based on an average tend to exhibit less variability than the original data.
True
False
3-2
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False
19. The naive forecast is limited in its application to series that reflect no trend or
seasonality.
True
False
20. The naive forecast can serve as a quick and easy standard of comparison against
which to judge the cost and accuracy of other techniques.
True
False
21. A moving average forecast tends to be more responsive to changes in the data series
when more data points are included in the average.
True
False
22. In order to update a moving average forecast, the values of each data point in the
average must be known.
True
False
23. Forecasts of future demand are used by operations people to plan capacity.
True
False
24. An advantage of a weighted moving average is that recent actual results can be given
more importance than what occurred a while ago.
True
False
False
False
27. The T in the model TAF = S + T represents the time dimension (which is usually
expressed in weeks or months).
True
False
False
3-3
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29. An advantage of trend-adjusted exponential smoothing over the linear trend equation
is its ability to adjust over time to changes in the trend.
True
False
False
31. In order to compute seasonal relatives, the trend of past data must be computed or
known, which means that for brand-new products this approach cannot be used.
True
False
32. Removing the seasonal component from a data series (deseasonalizing) can be
accomplished by dividing each data point by its appropriate seasonal relative.
True
False
33. If a pattern appears when a dependent variable is plotted against time, one should
use time series analysis instead of regression analysis.
True
False
34. Curvilinear and multiple regression procedures permit us to extend associative models
to relationships that are nonlinear or involve more than one predictor variable.
True
False
35. The sample standard deviation of forecast error is equal to the square root of MSE.
True
False
36. Correlation measures the strength and direction of a relationship between variables.
True
False
37. MAD is equal to the square root of MSE, which is why we calculate the easier MSE and
then calculate the more difficult MAD.
True
False
38. In exponential smoothing, an alpha of 1.0 will generate the same forecast that a naive
forecast would yield.
True
False
3-4
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39. A forecast method is generally deemed to perform adequately when the errors exhibit
an identifiable pattern.
True
False
40. A control chart involves setting action limits for cumulative forecast error.
True
False
41. A tracking signal focuses on the ratio of cumulative forecast error to the
corresponding value of MAD.
True
False
42. The use of a control chart assumes that errors are normally distributed about a mean
of zero.
True
False
43. Bias exists when forecasts tend to be greater or less than the actual values of time
series.
True
False
False
False
False
3-5
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47. Which of the following is a potential shortcoming of using sales force opinions in
demand forecasting?
A. Members of the sales force often have substantial histories of working with and
understanding their customers.
B. Members of the sales force often are well aware of customers' future plans.
C. Members of the sales force have direct contact with consumers.
D. Members of the sales force can have difficulty distinguishing between what
customers would like to do and what they actually will do.
E. Customers often are quite open with members of the sales force with regard to
future plans.
48. Suppose a four-period weighted average is being used to forecast demand. Weights
for the periods are as follows: wt-4 = 0.1, wt-3 = 0.2, wt-2 = 0.3 and wt-1 = 0.4. Demand
observed in the previous four periods was as follows: A t-4 = 380, At-3 = 410, At-2 = 390,
At-1 = 400. What will be the demand forecast for period t?
A.
B.
C.
D.
E.
402
397
399
393
403
49. Suppose a three-period weighted average is being used to forecast demand. Weights
for the periods are as follows: wt-3 = 0.2, wt-2 = 0.3 and wt-1 = 0.5. Demand observed in
the previous three periods was as follows: At-3 = 2,200, At-2 = 1,950, At-1 = 2,050. What
will be the demand forecast for period t?
A.
B.
C.
D.
E.
2,000
2,095
1,980
2,050
1,875
50. When choosing a forecasting technique, a critical trade-off that must be considered is
that between:
A.
B.
C.
D.
E.
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51. The more novel a new product or service design is, the more forecasters have to rely
on:
A.
B.
C.
D.
E.
subjective estimates.
seasonality.
cyclicality.
historical data.
smoothed variation.
A.
B.
C.
D.
E.
executive opinion.
salesperson opinion.
second opinions.
customer surveys.
Delphi methods.
53. Which of the following is/are a primary input into capacity, sales, and production
planning?
A.
B.
C.
D.
E.
product design
market share
ethics
globalization
demand forecasts
54. Which of the following features would not generally be considered common to all
forecasts?
A.
B.
C.
D.
E.
3-7
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56. Minimizing the sum of the squared deviations around the line is called:
A.
B.
C.
D.
E.
A.
B.
C.
D.
E.
A.
B.
C.
D.
E.
executive opinions
sales force opinions
consumer surveys
the Delphi method
time series analysis
A.
B.
C.
D.
E.
MSE.
MRP.
MPS.
MTM.
MTE.
60. Which of the following would be an advantage of using a sales force composite to
develop a demand forecast?
3-8
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A.
B.
C.
D.
E.
associative forecast
consumer survey
series of questionnaires
developed in India
historical data
A.
B.
C.
D.
E.
63. One reason for using the Delphi method in forecasting is to:
A.
B.
C.
D.
E.
A.
B.
C.
D.
E.
MSEs.
MAPs.
control charts.
correlation coefficients.
strategies.
A.
B.
C.
D.
E.
seasonal variation.
cycles.
irregular variation.
trend.
random variation.
3-9
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A.
B.
C.
D.
E.
A.
B.
C.
D.
E.
exponential smoothing.
MAPE.
linear decision rules.
MAD.
hindsight.
69. Using the latest observation in a sequence of data to forecast the next period is:
A.
B.
C.
D.
E.
3-10
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70. For the data given below, what would the naive forecast be for period 5?
A.
B.
C.
D.
E.
58
62
59.5
61
cannot tell from the data given
A.
B.
C.
D.
E.
72. Which is not a characteristic of simple moving averages applied to time series data?
A.
B.
C.
D.
E.
73. In order to increase the responsiveness of a forecast made using the moving average
technique, the number of data points in the average should be:
A.
B.
C.
D.
E.
decreased.
increased.
multiplied by a larger alpha.
multiplied by a smaller alpha.
eliminated if the MAD is greater than the MSE.
3-11
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74. A forecast based on the previous forecast plus a percentage of the forecast error is:
A.
B.
C.
D.
E.
a naive forecast.
a simple moving average forecast.
a centered moving average forecast.
an exponentially smoothed forecast.
an associative forecast.
A.
B.
C.
D.
E.
76. Which of the following smoothing constants would make an exponential smoothing
forecast equivalent to a naive forecast?
A.
B.
C.
D.
E.
0
.01
.1
.5
1.0
77. Simple exponential smoothing is being used to forecast demand. The previous
forecast of 66 turned out to be four units less than actual demand. The next forecast
is 66.6, implying a smoothing constant, alpha, equal to:
A.
B.
C.
D.
E.
.01.
.10.
.15.
.20.
.60.
78. Given an actual demand of 59, a previous forecast of 64, and an alpha of .3, what
would the forecast for the next period be using simple exponential smoothing?
A.
B.
C.
D.
E.
36.9
57.5
60.5
62.5
65.5
3-12
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79. Given an actual demand of 105, a forecasted value of 97, and an alpha of .4, the
simple exponential smoothing forecast for the next period would be:
A.
B.
C.
D.
E.
80.8.
93.8.
100.2.
101.8.
108.2.
80. Which of the following possible values of alpha would cause exponential smoothing to
respond the most quickly to forecast errors?
A.
B.
C.
D.
E.
0
.01
.05
.10
.15
81. A manager uses the following equation to predict monthly receipts: Y t = 40,000 +
150t. What is the forecast for July if t = 0 in April of this year?
A.
B.
C.
D.
E.
40,450
40,600
42,100
42,250
42,400
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A.
B.
C.
D.
E.
quantity; percentage
percentage; quantity
quantity; quantity
percentage; percentage
qualitative; quantitative
A.
B.
C.
D.
E.
double smoothing
Delphi
mean squared error
centered moving average
exponential smoothing
85. A persistent tendency for forecasts to be greater than or less than the actual values is
called:
A.
B.
C.
D.
E.
bias.
tracking.
control charting.
positive correlation.
linear regression.
86. Which of the following might be used to indicate the cyclical component of a
forecast?
A.
B.
C.
D.
E.
leading variable
mean squared error
Delphi technique
exponential smoothing
mean absolute deviation
A.
B.
C.
D.
E.
sensitivity analysis.
regression analysis.
simple moving averages.
centered moving averages.
exponential smoothing.
3-14
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A.
B.
C.
D.
E.
89. Which of the following corresponds to the predictor variable in simple linear
regression?
A.
B.
C.
D.
E.
regression coefficient
dependent variable
independent variable
predicted variable
demand coefficient
A.
B.
C.
D.
E.
91. Given forecast errors of 4, 8, and -3, what is the mean absolute deviation?
A.
B.
C.
D.
E.
4
3
5
6
12
92. Given forecast errors of 5, 0, -4, and 3, what is the mean absolute deviation?
A.
B.
C.
D.
E.
4
3
2.5
2
1
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A.
B.
C.
D.
E.
-4
4
5
12
6
A.
B.
C.
D.
95. The two most important factors in choosing a forecasting technique are:
A.
B.
C.
D.
E.
A.
B.
C.
D.
E.
none.
low.
moderate.
high.
total.
A.
B.
C.
D.
E.
estimate of accuracy
timeliness
meaningful units
low cost
written
3-16
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A.
the absence of randomness.
B.
continuity of some underlying causal system.
C. a linear relationship between time and demand.
D. accuracy that increases the farther out in time the forecast projects.
E. accuracy that is better when individual items, rather than groups of items, are
being considered.
99. A managerial approach toward forecasting which seeks to actively influence demand
is:
A.
B.
C.
D.
E.
reactive.
proactive.
influential.
protracted.
retroactive.
mission statements.
control charting.
short-term forecast accuracy.
exponential smoothing.
customer selection.
101 Given the following historical data, what is the simple three-period moving average
.
forecast for period 6?
A.
B.
C.
D.
E.
67
115
69
68
68.67
3-17
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102 Given the following historical data and weights of .5, .3, and .2, what is the three.
period moving average forecast for period 5?
A.
B.
C.
D.
E.
144.20
144.80
144.67
143.00
144.00
0.
10.
30.
175.
225.
3-18
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105 The president of State University wants to forecast student enrollments for this
.
academic year based on the following historical data:
What is the forecast for this year using the naive approach?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,000
22,800
106 The president of State University wants to forecast student enrollments for this
.
academic year based on the following historical data:
What is the forecast for this year using a four-year simple moving average?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
3-19
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107 The president of State University wants to forecast student enrollments for this
.
academic year based on the following historical data:
What is the forecast for this year using exponential smoothing with alpha = .5, if the
forecast for two years ago was 16,000?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
108 The president of State University wants to forecast student enrollments for this
.
academic year based on the following historical data:
What is the forecast for this year using the least squares trend line for these data?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
3-20
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109 The president of State University wants to forecast student enrollments for this
.
academic year based on the following historical data:
What is the forecast for this year using trend-adjusted (double) smoothing with alpha
= .05 and beta = .3, if the forecast for last year was 21,000, the forecast for two
years ago was 19,000, and the trend estimate for last year's forecast was 1,500?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
110 The business analyst for Video Sales, Inc. wants to forecast this year's demand for
.
DVD decoders based on the following historical data:
What is the forecast for this year using the naive approach?
A.
B.
C.
D.
E.
163
180
300
420
510
3-21
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111 The business analyst for Video Sales, Inc. wants to forecast this year's demand for
.
DVD decoders based on the following historical data:
What is the forecast for this year using a three-year weighted moving average with
weights of .5, .3, and .2?
A.
B.
C.
D.
E.
163
180
300
420
510
112 The business analyst for Video Sales, Inc. wants to forecast this year's demand for
.
DVD decoders based on the following historical data:
What is the forecast for this year using exponential smoothing with alpha = .4, if the
forecast for two years ago was 750?
A.
B.
C.
D.
E.
163
180
300
420
510
3-22
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113 The business analyst for Video Sales, Inc. wants to forecast this year's demand for
.
DVD decoders based on the following historical data:
What is the forecast for this year using the least squares trend line for these data?
A.
B.
C.
D.
E.
163
180
300
420
510
114 The business analyst for Video Sales, Inc. wants to forecast this year's demand for
.
DVD decoders based on the following historical data:
What is the forecast for this year using trend-adjusted (double) smoothing with alpha
= .3 and beta = .2, if the forecast for last year was 310, the forecast for two years
ago was 430, and the trend estimate for last year's forecast was -150?
A.
B.
C.
D.
E.
162.4
180.3
301.4
403.2
510.0
3-23
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115 Professor Very Busy needs to allocate time next week to include time for office hours.
.
He needs to forecast the number of students who will seek appointments. He has
gathered the following data:
A.
B.
C.
D.
E.
45
50
52
65
78
116 Professor Very Busy needs to allocate time next week to include time for office hours.
.
He needs to forecast the number of students who will seek appointments. He has
gathered the following data:
A.
B.
C.
D.
E.
49
50
52
65
78
3-24
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117 Professor Very Busy needs to allocate time next week to include time for office hours.
.
He needs to forecast the number of students who will seek appointments. He has
gathered the following data:
What is this week's forecast using exponential smoothing with alpha = .2, if the
forecast for two weeks ago was 90?
A.
B.
C.
D.
E.
49
50
52
65
77
118 Professor Very Busy needs to allocate time next week to include time for office hours.
.
He needs to forecast the number of students who will seek appointments. He has
gathered the following data:
What is this week's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
49
50
52
65
78
3-25
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119 Professor Very Busy needs to allocate time next week to include time for office hours.
.
He needs to forecast the number of students who will seek appointments. He has
gathered the following data:
What is this week's forecast using trend-adjusted (double) smoothing with alpha = .5
and beta = .1, if the forecast for last week was 65, the forecast for two weeks ago
was 75, and the trend estimate for last week's forecast was -5?
A.
B.
C.
D.
E.
49.3
50.6
51.3
65.4
78.7
120 A concert promoter is forecasting this year's attendance for one of his concerts based
.
on the following historical data:
A.
B.
C.
D.
E.
22,000
20,000
18,000
15,000
12,000
3-26
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121 A concert promoter is forecasting this year's attendance for one of his concerts based
.
on the following historical data:
What is this year's forecast using a two-year weighted moving average with weights
of .7 and .3?
A.
B.
C.
D.
E.
19,400
18,600
19,000
11,400
10,600
122 A concert promoter is forecasting this year's attendance for one of his concerts based
.
on the following historical data:
What is this year's forecast using exponential smoothing with alpha = .2, if last year's
smoothed forecast was 15,000?
A.
B.
C.
D.
E.
20,000
19,000
17,500
16,000
15,000
3-27
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123 A concert promoter is forecasting this year's attendance for one of his concerts based
.
on the following historical data:
What is this year's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
20,000
21,000
22,000
23,000
24,000
124 A concert promoter is forecasting this year's attendance for one of his concerts based
.
on the following historical data:
The previous trend line had predicted 18,500 for two years ago, and 19,700 for last
year. What was the mean absolute deviation for these forecasts?
A.
B.
C.
D.
E.
100
200
400
500
800
3-28
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125 The dean of a school of business is forecasting total student enrollment for this year's
.
summer session classes based on the following historical data:
A.
B.
C.
D.
E.
2,000
2,200
2,800
3,000
4,300
126 The dean of a school of business is forecasting total student enrollment for this year's
.
summer session classes based on the following historical data:
A.
B.
C.
D.
E.
2,667
2,600
2,500
2,400
2,333
3-29
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127 The dean of a school of business is forecasting total student enrollment for this year's
.
summer session classes based on the following historical data:
What is this year's forecast using exponential smoothing with alpha = .4, if last year's
smoothed forecast was 2,600?
A.
B.
C.
D.
E.
2,600
2,760
2,800
3,840
3,000
128 The dean of a school of business is forecasting total student enrollment for this year's
.
summer session classes based on the following historical data:
What is the annual rate of change (slope) of the least squares trend line for these
data?
A.
B.
C.
D.
E.
0
200
400
180
360
3-30
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129 The dean of a school of business is forecasting total student enrollment for this year's
.
summer session classes based on the following historical data:
What is this year's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
3,600
3,500
3,400
3,300
3,200
130 The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
.
(October's) demand for the one new tanning booth based on the following historical
data:
A.
B.
C.
D.
E.
100
160
130
140
120
3-31
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131 The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
.
(October's) demand for the one new tanning booth based on the following historical
data:
What is this month's forecast using a four-month weighted moving average with
weights of .4, .3, .2, and .1?
A.
B.
C.
D.
E.
120
129
141
135
140
132 The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
.
(October's) demand for the one new tanning booth based on the following historical
data:
What is this month's forecast using exponential smoothing with alpha = .2, if August's
forecast was 145?
A.
B.
C.
D.
E.
144
140
142
148
163
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133 The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
.
(October's) demand for the one new tanning booth based on the following historical
data:
What is the monthly rate of change (slope) of the least squares trend line for these
data?
A.
B.
C.
D.
E.
320
102
8
-.4
-8
134 The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
.
(October's) demand for the one new tanning booth based on the following historical
data:
What is this month's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
1,250
128.6
102
158
164
3-33
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135 Which of the following mechanisms for enhancing profitability is most likely to result
.
from improving short-term forecast performance?
A.
B.
C.
D.
E.
increased inventory
reduced flexibility
higher-quality products
greater customer satisfaction
greater seasonality
136 Which of the following changes would tend to shorten the time frame for short-term
.
forecasting?
A.
bringing greater variety into the product mix
B. increasing the flexibility of the production system
C.
ordering fewer weather-sensitive items
D.
adding more special-purpose equipment
E. investing in the production system to make it more task-specific
137 Which of the following helps improve supply chain forecasting performance?
.
A.
B.
C.
D.
E.
3-34
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Essay Questions
140 Develop a forecast for the next period, given the data below, using a three-period
.
moving average.
Using exponential smoothing with alpha = .2, and assuming the forecast for period 11
was 80, what would the forecast for period 14 be?
3-35
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143 A manager is using the equation below to forecast quarterly demand for a product:
.
Yt = 6,000 + 80t where t = 0 at Q2 of last year
Quarter relatives are Q1 = .6, Q2 = .9, Q3 = 1.3, and Q4 = 1.2.
What forecasts are appropriate for the last quarter of this year and the first quarter of
next year?
144 Over the past five years, a firm's sales have averaged 250 units in the first quarter of
.
each year, 100 units in the second quarter, 150 units in the third quarter, and 300
units in the fourth quarter. What are appropriate quarter relatives for this firm's sales?
Hint: Only minimal computations are necessary.
3-36
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145 A manager has been using a certain technique to forecast demand for gallons of ice
.
cream for the past six periods. Actual and predicted amounts are shown below. Would
a naive forecast have produced better results?
146 A new car dealer has been using exponential smoothing with an alpha of .2 to
.
forecast weekly new car sales. Given the data below, would a naive forecast have
provided greater accuracy? Explain. Assume an initial exponential forecast of 60 units
in period 2 (i.e., no forecast for period 1).
3-37
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147 A CPA firm has been using the following equation to predict annual demand for tax
.
audits: Yt = 55 + 4t. Demand for the past few years is shown below. Is the forecast
performing as well as it might? Explain.
148 Given the data below, develop a forecast for period 6 using a four-period weighted
.
moving average and weights of .4, .3, .2 and .1.
3-38
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149 Use linear regression to develop a predictive model for demand for burial vaults
.
based on sales of caskets.
150 Given the following data, develop a linear regression model for y as a function of x.
.
3-39
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151 Given the following data, develop a linear regression model for y as a function of x.
.
152 Develop a linear trend equation for the data on bread deliveries shown below.
.
Forecast deliveries for period 11 through 14.
3-40
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154 A manager wants to choose one of two forecasting alternatives. Each alternative was
.
tested using historical data. The resulting forecast errors for the two are shown in the
table. Analyze the data and recommend a course of action to the manager.
155 A manager uses this equation to predict demand: Y t = 20 + 4t. Over the past eight
.
periods, demand has been as follows. Are the results acceptable? Explain.
3-42
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156 Data on demand over the last few years are available as follows:
.
What would this year's forecast be if we were using the naive approach?
3-43
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157 Data on demand over the last few years are available as follows:
.
3-44
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158 Data on demand over the last few years are available as follows:
.
What is this year's forecast using exponential smoothing with alpha = .25, if last
year's smoothed forecast was 45?
3-45
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159 Data on demand over the last few years are available as follows:
.
What are this and next year's forecasts using the least squares trend line for these
data?
3-46
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160 Data on demand over the last few years are available as follows:
.
What is this year's forecast using trend-adjusted (double) smoothing with alpha = .2
and beta = .1, if the forecast for last year was 56, the forecast for two years ago was
46, and the trend estimate for last year's forecast was 7?
161 Data on the last three years of demand are available as follows:
.
What is the centered moving average for spring two years ago?
3-47
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162 Data on the last three years of demand are available as follows:
.
163 Data on the last three years of demand are available as follows:
.
What is the linear regression trend line for these data (t = 0 for spring, three years
ago)?
3-48
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164 Data on the last three years of demand are available as follows:
.
3-49
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1.
2.
For new products in a strong growth mode, a low alpha will minimize forecast errors
when using exponential smoothing techniques.
FALSE
If growth is strong, alpha should be large so that the model will catch up more
quickly.
3.
Once accepted by managers, forecasts should be held firm regardless of new input
since many plans have been made using the original forecast.
FALSE
Flexibility to accommodate major changes is important to good forecasting.
Blooms: Understand
Learning Objective: 03-04 Outline the steps in the forecasting process.
Level of Difficulty: 1 Easy
Topic: Steps in the Forecasting Process
4.
Forecasts for groups of items tend to be less accurate than forecasts for individual
items because forecasts for individual items don't include as many influencing
factors.
FALSE
Forecasting for an individual item is more difficult than forecasting for a number of
items.
5.
Forecasts help managers both to plan the system itself and to provide valuable
information for using the system.
TRUE
Both planning and use are shaped by forecasts.
6.
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7.
When new products or services are introduced, focus forecasting models are an
attractive option.
FALSE
Because focus forecasting models depend on historical data, they're not so
attractive for newly introduced products or services.
8.
The purpose of the forecast should be established first so that the level of detail,
amount of resources, and accuracy level can be understood.
TRUE
All of these considerations are shaped by what the forecast will be used for.
9.
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10.
11.
A consumer survey is an easy and sure way to obtain accurate input from future
customers since most people enjoy participating in surveys.
FALSE
Most people do not enjoy participating in surveys.
12.
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13.
14.
The shorter the forecast period, the more accurately the forecasts tend to track
what actually happens.
TRUE
Long-term forecasting is much more difficult to do accurately.
15.
Forecasting techniques that are based on time-series data assume that future
values of the series will duplicate past values.
FALSE
Time-series forecasts assume that future patterns in the series will mimic past
patterns in the series.
3-54
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16.
17.
Forecasts based on an average tend to exhibit less variability than the original
data.
TRUE
Averaging is a way of smoothing out random variability.
18.
3-55
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19.
The naive forecast is limited in its application to series that reflect no trend or
seasonality.
FALSE
When a trend or seasonality is present, the naive forecast is more limited in its
application.
20.
The naive forecast can serve as a quick and easy standard of comparison against
which to judge the cost and accuracy of other techniques.
TRUE
Often the naive forecast performs reasonably well when compared to more
complex techniques.
21.
3-56
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McGraw-Hill Education.
22.
In order to update a moving average forecast, the values of each data point in the
average must be known.
TRUE
The moving average cannot be updated until the most recent value is known.
23.
24.
25.
26.
27.
The T in the model TAF = S + T represents the time dimension (which is usually
expressed in weeks or months).
FALSE
The T represents the trend dimension.
28.
3-58
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29.
30.
31.
In order to compute seasonal relatives, the trend of past data must be computed or
known, which means that for brand-new products this approach cannot be used.
TRUE
Computing seasonal relatives depends on past data being available.
3-59
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32.
33.
If a pattern appears when a dependent variable is plotted against time, one should
use time series analysis instead of regression analysis.
TRUE
Patterns reflect influences such as trends or seasonality that go against regression
analysis assumptions.
34.
3-60
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35.
The sample standard deviation of forecast error is equal to the square root of MSE.
TRUE
The MSE is equal to the sample variance of the forecast error.
36.
37.
MAD is equal to the square root of MSE, which is why we calculate the easier MSE
and then calculate the more difficult MAD.
FALSE
MAD is the mean absolute deviation.
38.
In exponential smoothing, an alpha of 1.0 will generate the same forecast that a
naive forecast would yield.
TRUE
With alpha equal to 1 we are using a naive forecasting method.
39.
40.
A control chart involves setting action limits for cumulative forecast error.
FALSE
Control charts set action limits for the tracking signal.
41.
3-62
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42.
The use of a control chart assumes that errors are normally distributed about a
mean of zero.
TRUE
Over time, a forecast model's tracking signal should fluctuate randomly about a
mean of zero.
43.
Bias exists when forecasts tend to be greater or less than the actual values of time
series.
TRUE
A tendency in one direction is defined as bias.
44.
3-63
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45.
46.
3-64
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47.
A. Members of the sales force often have substantial histories of working with and
understanding their customers.
B. Members of the sales force often are well aware of customers' future plans.
C. Members of the sales force have direct contact with consumers.
D. Members of the sales force can have difficulty distinguishing between what
customers would like to do and what they actually will do.
E. Customers often are quite open with members of the sales force with regard to
future plans.
Customers themselves may be unclear regarding what they'd like to do versus
what they'll actually do.
48.
A.
B.
C.
D.
E.
402
397
399
393
403
The forecast will be (.1 * 380) + (.2 * 410) + (.3 * 390) + (.4 * 400) = 397.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-09 Prepare a weighted-average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-65
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McGraw-Hill Education.
49.
A.
B.
C.
D.
E.
2,000
2,095
1,980
2,050
1,875
The forecast for will be (.2 * 2,200) + (.3 * 1,950) + (.5 * 2,050) = 2,050.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-09 Prepare a weighted-average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
50.
A.
B.
C.
D.
E.
The trade-off between cost and accuracy is the critical consideration when
choosing a forecasting technique.
3-66
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51.
The more novel a new product or service design is, the more forecasters have to
rely on:
A.
B.
C.
D.
E.
subjective estimates.
seasonality.
cyclicality.
historical data.
smoothed variation.
New products and services lack historical data, so forecasts for them must be
based on subjective estimates.
52.
A.
B.
C.
D.
E.
executive opinion.
salesperson opinion.
second opinions.
customer surveys.
Delphi methods.
3-67
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53.
Which of the following is/are a primary input into capacity, sales, and production
planning?
A.
B.
C.
D.
E.
product design
market share
ethics
globalization
demand forecasts
Demand forecasts are direct inputs into capacity, sales, and production plans.
54.
Which of the following features would not generally be considered common to all
forecasts?
A.
Assumption of a stable underlying causal system.
B. Actual results will differ somewhat from predicted values.
C. Historical data is available on which to base the forecast.
D. Forecasts for groups of items tend to be more accurate than forecasts for
individual items.
E.
Accuracy decreases as the time horizon increases.
In some forecasting situations historical data are not available.
3-68
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55.
A.
B.
C.
D.
E.
56.
Minimizing the sum of the squared deviations around the line is called:
A.
B.
C.
D.
E.
Least squares estimations minimize the sum of squared deviations around the
estimated regression function.
57.
A.
B.
C.
D.
E.
58.
A.
B.
C.
D.
E.
executive opinions
sales force opinions
consumer surveys
the Delphi method
time series analysis
59.
A.
B.
C.
D.
E.
MSE.
MRP.
MPS.
MTM.
MTE.
3-70
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60.
61.
A.
B.
C.
D.
E.
associative forecast
consumer survey
series of questionnaires
developed in India
historical data
3-71
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McGraw-Hill Education.
62.
A.
B.
C.
D.
E.
63.
A.
B.
C.
D.
E.
3-72
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McGraw-Hill Education.
64.
A.
B.
C.
D.
E.
MSEs.
MAPs.
control charts.
correlation coefficients.
strategies.
65.
A.
B.
C.
D.
E.
seasonal variation.
cycles.
irregular variation.
trend.
random variation.
66.
A.
B.
C.
D.
E.
Seasons happen within time periods; cycles happen across multiple time periods.
Blooms: Remember
Learning Objective: 03-13 Compute and use seasonal relatives.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
67.
A.
B.
C.
D.
E.
68.
A.
B.
C.
D.
E.
exponential smoothing.
MAPE.
linear decision rules.
MAD.
hindsight.
MAPE depicts the forecast error relative to what was being forecast.
3-74
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McGraw-Hill Education.
69.
Using the latest observation in a sequence of data to forecast the next period is:
A.
B.
C.
D.
E.
70.
For the data given below, what would the naive forecast be for period 5?
A.
B.
C.
D.
E.
58
62
59.5
61
cannot tell from the data given
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-75
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McGraw-Hill Education.
71.
A.
B.
C.
D.
E.
72.
A.
B.
C.
D.
E.
3-76
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McGraw-Hill Education.
73.
A.
B.
C.
D.
E.
decreased.
increased.
multiplied by a larger alpha.
multiplied by a smaller alpha.
eliminated if the MAD is greater than the MSE.
74.
A forecast based on the previous forecast plus a percentage of the forecast error
is:
A.
B.
C.
D.
E.
a naive forecast.
a simple moving average forecast.
a centered moving average forecast.
an exponentially smoothed forecast.
an associative forecast.
Exponential smoothing uses the previous forecast error to shape the next forecast.
3-77
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McGraw-Hill Education.
75.
A.
B.
C.
D.
E.
The most recent period of demand is given the most weight in exponential
smoothing.
76.
A.
B.
C.
D.
E.
0
.01
.1
.5
1.0
3-78
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77.
A.
B.
C.
D.
E.
.01.
.10.
.15.
.20.
.60.
A previous period's forecast error of 4 units would lead to a change in the forecast
of 0.6 if alpha equals 0.15.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
78.
Given an actual demand of 59, a previous forecast of 64, and an alpha of .3, what
would the forecast for the next period be using simple exponential smoothing?
A.
B.
C.
D.
E.
36.9
57.5
60.5
62.5
65.5
Multiply the previous period's forecast error (-5) by alpha and then add to the
previous period's forecast.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-79
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79.
Given an actual demand of 105, a forecasted value of 97, and an alpha of .4, the
simple exponential smoothing forecast for the next period would be:
A.
B.
C.
D.
E.
80.8.
93.8.
100.2.
101.8.
108.2.
Multiply the previous period's forecast error (8) by alpha and then add to the
previous period's forecast.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
80.
Which of the following possible values of alpha would cause exponential smoothing
to respond the most quickly to forecast errors?
A.
B.
C.
D.
E.
0
.01
.05
.10
.15
3-80
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81.
A.
B.
C.
D.
E.
40,450
40,600
42,100
42,250
42,400
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
82.
3-81
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McGraw-Hill Education.
83.
A.
B.
C.
D.
E.
quantity; percentage
percentage; quantity
quantity; quantity
percentage; percentage
qualitative; quantitative
84.
A.
B.
C.
D.
E.
double smoothing
Delphi
mean squared error
centered moving average
exponential smoothing
The centered moving average serves as the basis point for computing seasonal
relatives.
3-82
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McGraw-Hill Education.
85.
A persistent tendency for forecasts to be greater than or less than the actual values
is called:
A.
B.
C.
D.
E.
bias.
tracking.
control charting.
positive correlation.
linear regression.
Bias is a tendency for a forecast to be above (or below) the actual value.
86.
A.
B.
C.
D.
E.
leading variable
mean squared error
Delphi technique
exponential smoothing
mean absolute deviation
Leading variables, such as births in a given year, can correlate strongly with longterm phenomena such as cycles.
3-83
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87.
A.
B.
C.
D.
E.
sensitivity analysis.
regression analysis.
simple moving averages.
centered moving averages.
exponential smoothing.
88.
A.
B.
C.
D.
E.
3-84
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McGraw-Hill Education.
89.
A.
B.
C.
D.
E.
regression coefficient
dependent variable
independent variable
predicted variable
demand coefficient
Demand is the typical dependent variable when forecasting with simple linear
regression.
90.
A.
B.
C.
D.
E.
3-85
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McGraw-Hill Education.
91.
Given forecast errors of 4, 8, and -3, what is the mean absolute deviation?
A.
B.
C.
D.
E.
4
3
5
6
12
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 1 Easy
Topic: Forecast Accuracy
92.
Given forecast errors of 5, 0, -4, and 3, what is the mean absolute deviation?
A.
B.
C.
D.
E.
4
3
2.5
2
1
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 1 Easy
Topic: Forecast Accuracy
93.
A.
B.
C.
D.
E.
-4
4
5
12
6
AACSB: Analytic
Accessibility: Keyboard Navigation
3-86
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Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 2 Medium
Topic: Forecast Accuracy
94.
A.
B.
C.
D.
The mean squared error leads to an estimate for the sample forecast standard
deviation.
95.
A.
B.
C.
D.
E.
More accurate forecasts cost more but may not be worth the additional cost.
3-87
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96.
A.
B.
C.
D.
E.
none.
low.
moderate.
high.
total.
97.
A.
B.
C.
D.
E.
estimate of accuracy
timeliness
meaningful units
low cost
written
3-88
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McGraw-Hill Education.
98.
A.
the absence of randomness.
B.
continuity of some underlying causal system.
C.
a linear relationship between time and demand.
D. accuracy that increases the farther out in time the forecast projects.
E. accuracy that is better when individual items, rather than groups of items, are
being considered.
Forecasting techniques generally assume that the same underlying causal system
that existed in the past will continue to exist in the future.
99.
A.
B.
C.
D.
E.
reactive.
proactive.
influential.
protracted.
retroactive.
3-89
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A.
B.
C.
D.
E.
mission statements.
control charting.
short-term forecast accuracy.
exponential smoothing.
customer selection.
101. Given the following historical data, what is the simple three-period moving average
forecast for period 6?
A.
B.
C.
D.
E.
67
115
69
68
68.67
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-90
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102. Given the following historical data and weights of .5, .3, and .2, what is the threeperiod moving average forecast for period 5?
A.
B.
C.
D.
E.
144.20
144.80
144.67
143.00
144.00
Multiply period 4 (144) by .5, period 3 (148) by .3, and period 2 (142) by .2, then
sum these products.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
A.
variations around the line are nonrandom.
B.
deviations around the line are normally distributed.
C. predictions can easily be made beyond the range of observed values of the
predictor variable.
D. all possible predictor variables are included in the model.
E. the variance of error terms (deviations) varies directly with the predictor
variable.
That deviations conform to the normal distribution is a very important assumption
underpinning simple linear regression.
3-91
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McGraw-Hill Education.
104. Given forecast errors of -5, -10, and +15, the MAD is:
A.
B.
C.
D.
E.
0.
10.
30.
175.
225.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 1 Easy
Topic: Forecast Accuracy
105. The president of State University wants to forecast student enrollments for this
academic year based on the following historical data:
What is the forecast for this year using the naive approach?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,000
22,800
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-92
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McGraw-Hill Education.
106. The president of State University wants to forecast student enrollments for this
academic year based on the following historical data:
What is the forecast for this year using a four-year simple moving average?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-93
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McGraw-Hill Education.
107. The president of State University wants to forecast student enrollments for this
academic year based on the following historical data:
What is the forecast for this year using exponential smoothing with alpha = .5, if
the forecast for two years ago was 16,000?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
Multiply last year's forecast error by the smoothing constant, then add that
adjusted error to last year's forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-94
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McGraw-Hill Education.
108. The president of State University wants to forecast student enrollments for this
academic year based on the following historical data:
What is the forecast for this year using the least squares trend line for these data?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-95
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McGraw-Hill Education.
109. The president of State University wants to forecast student enrollments for this
academic year based on the following historical data:
What is the forecast for this year using trend-adjusted (double) smoothing with
alpha = .05 and beta = .3, if the forecast for last year was 21,000, the forecast for
two years ago was 19,000, and the trend estimate for last year's forecast was
1,500?
A.
B.
C.
D.
E.
18,750
19,500
21,000
22,650
22,800
Smooth both the trend and the forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-96
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McGraw-Hill Education.
110. The business analyst for Video Sales, Inc. wants to forecast this year's demand for
DVD decoders based on the following historical data:
What is the forecast for this year using the naive approach?
A.
B.
C.
D.
E.
163
180
300
420
510
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-97
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McGraw-Hill Education.
111. The business analyst for Video Sales, Inc. wants to forecast this year's demand for
DVD decoders based on the following historical data:
What is the forecast for this year using a three-year weighted moving average with
weights of .5, .3, and .2?
A.
B.
C.
D.
E.
163
180
300
420
510
Multiply the last three periods of demand by the appropriate weights, then sum the
resulting products.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-09 Prepare a weighted-average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-98
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112. The business analyst for Video Sales, Inc. wants to forecast this year's demand for
DVD decoders based on the following historical data:
What is the forecast for this year using exponential smoothing with alpha = .4, if
the forecast for two years ago was 750?
A.
B.
C.
D.
E.
163
180
300
420
510
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-99
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McGraw-Hill Education.
113. The business analyst for Video Sales, Inc. wants to forecast this year's demand for
DVD decoders based on the following historical data:
What is the forecast for this year using the least squares trend line for these data?
A.
B.
C.
D.
E.
163
180
300
420
510
Treat the earliest period of demand as period 0, then formulate least squares
estimates and proceed.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-100
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McGraw-Hill Education.
114. The business analyst for Video Sales, Inc. wants to forecast this year's demand for
DVD decoders based on the following historical data:
What is the forecast for this year using trend-adjusted (double) smoothing with
alpha = .3 and beta = .2, if the forecast for last year was 310, the forecast for two
years ago was 430, and the trend estimate for last year's forecast was -150?
A.
B.
C.
D.
E.
162.4
180.3
301.4
403.2
510.0
Smooth both the trend and the forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-12 Prepare a trend-adjusted exponential smoothing forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-101
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McGraw-Hill Education.
115. Professor Very Busy needs to allocate time next week to include time for office
hours. He needs to forecast the number of students who will seek appointments.
He has gathered the following data:
A.
B.
C.
D.
E.
45
50
52
65
78
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-102
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McGraw-Hill Education.
116. Professor Very Busy needs to allocate time next week to include time for office
hours. He needs to forecast the number of students who will seek appointments.
He has gathered the following data:
A.
B.
C.
D.
E.
49
50
52
65
78
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-103
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McGraw-Hill Education.
117. Professor Very Busy needs to allocate time next week to include time for office
hours. He needs to forecast the number of students who will seek appointments.
He has gathered the following data:
What is this week's forecast using exponential smoothing with alpha = .2, if the
forecast for two weeks ago was 90?
A.
B.
C.
D.
E.
49
50
52
65
77
Formulate the forecast for last week, then use that to get this week's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-104
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McGraw-Hill Education.
118. Professor Very Busy needs to allocate time next week to include time for office
hours. He needs to forecast the number of students who will seek appointments.
He has gathered the following data:
What is this week's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
49
50
52
65
78
Treat the earliest period as period 0, then formulate least squares coefficients and
proceed.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-105
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McGraw-Hill Education.
119. Professor Very Busy needs to allocate time next week to include time for office
hours. He needs to forecast the number of students who will seek appointments.
He has gathered the following data:
What is this week's forecast using trend-adjusted (double) smoothing with alpha = .
5 and beta = .1, if the forecast for last week was 65, the forecast for two weeks ago
was 75, and the trend estimate for last week's forecast was -5?
A.
B.
C.
D.
E.
49.3
50.6
51.3
65.4
78.7
Smooth both the trend and the forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-12 Prepare a trend-adjusted exponential smoothing forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-106
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McGraw-Hill Education.
120. A concert promoter is forecasting this year's attendance for one of his concerts
based on the following historical data:
A.
B.
C.
D.
E.
22,000
20,000
18,000
15,000
12,000
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-107
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McGraw-Hill Education.
121. A concert promoter is forecasting this year's attendance for one of his concerts
based on the following historical data:
What is this year's forecast using a two-year weighted moving average with
weights of .7 and .3?
A.
B.
C.
D.
E.
19,400
18,600
19,000
11,400
10,600
Multiply the two most recent periods by the appropriate weights, then sum the
resulting products.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-09 Prepare a weighted-average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-108
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McGraw-Hill Education.
122. A concert promoter is forecasting this year's attendance for one of his concerts
based on the following historical data:
What is this year's forecast using exponential smoothing with alpha = .2, if last
year's smoothed forecast was 15,000?
A.
B.
C.
D.
E.
20,000
19,000
17,500
16,000
15,000
Multiply last year's forecast error by the smoothing constant, then add that product
to last year's forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-109
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McGraw-Hill Education.
123. A concert promoter is forecasting this year's attendance for one of his concerts
based on the following historical data:
What is this year's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
20,000
21,000
22,000
23,000
24,000
Treat the earliest year as period zero in formulating least squares coefficients.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-110
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McGraw-Hill Education.
124. A concert promoter is forecasting this year's attendance for one of his concerts
based on the following historical data:
The previous trend line had predicted 18,500 for two years ago, and 19,700 for last
year. What was the mean absolute deviation for these forecasts?
A.
B.
C.
D.
E.
100
200
400
500
800
Convert each period's forecast error into absolute value, then average.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 2 Medium
Topic: Forecast Accuracy
3-111
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McGraw-Hill Education.
125. The dean of a school of business is forecasting total student enrollment for this
year's summer session classes based on the following historical data:
A.
B.
C.
D.
E.
2,000
2,200
2,800
3,000
4,300
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-112
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McGraw-Hill Education.
126. The dean of a school of business is forecasting total student enrollment for this
year's summer session classes based on the following historical data:
A.
B.
C.
D.
E.
2,667
2,600
2,500
2,400
2,333
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-113
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McGraw-Hill Education.
127. The dean of a school of business is forecasting total student enrollment for this
year's summer session classes based on the following historical data:
What is this year's forecast using exponential smoothing with alpha = .4, if last
year's smoothed forecast was 2,600?
A.
B.
C.
D.
E.
2,600
2,760
2,800
3,840
3,000
Multiply last year's forecast error by the smoothing constant. Add the product to
last year's forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-114
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McGraw-Hill Education.
128. The dean of a school of business is forecasting total student enrollment for this
year's summer session classes based on the following historical data:
What is the annual rate of change (slope) of the least squares trend line for these
data?
A.
B.
C.
D.
E.
0
200
400
180
360
Treat the earliest period as period 0, then formulate the least squares slope.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-115
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McGraw-Hill Education.
129. The dean of a school of business is forecasting total student enrollment for this
year's summer session classes based on the following historical data:
What is this year's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
3,600
3,500
3,400
3,300
3,200
Treat the earliest period as period 0, then formulate the least squares coefficients
and proceed.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-116
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McGraw-Hill Education.
130. The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
(October's) demand for the one new tanning booth based on the following historical
data:
A.
B.
C.
D.
E.
100
160
130
140
120
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-117
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McGraw-Hill Education.
131. The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
(October's) demand for the one new tanning booth based on the following historical
data:
What is this month's forecast using a four-month weighted moving average with
weights of .4, .3, .2, and .1?
A.
B.
C.
D.
E.
120
129
141
135
140
Multiply the four most recent periods of demand by the appropriate weights, then
sum the resulting products.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-09 Prepare a weighted-average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-118
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McGraw-Hill Education.
132. The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
(October's) demand for the one new tanning booth based on the following historical
data:
What is this month's forecast using exponential smoothing with alpha = .2, if
August's forecast was 145?
A.
B.
C.
D.
E.
144
140
142
148
163
First calculate September's forecast, then use that to calculate this month's
forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-119
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McGraw-Hill Education.
133. The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
(October's) demand for the one new tanning booth based on the following historical
data:
What is the monthly rate of change (slope) of the least squares trend line for these
data?
A.
B.
C.
D.
E.
320
102
8
-.4
-8
Treat the earliest period as period 0, then formulate the least squares slope.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-120
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McGraw-Hill Education.
134. The owner of Darkest Tans Unlimited in a local mall is forecasting this month's
(October's) demand for the one new tanning booth based on the following historical
data:
What is this month's forecast using the least squares trend line for these data?
A.
B.
C.
D.
E.
1,250
128.6
102
158
164
Treat the earliest period as period 0, then formulate the least squares coefficients
and proceed.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
135. Which of the following mechanisms for enhancing profitability is most likely to
result from improving short-term forecast performance?
A.
B.
C.
D.
E.
increased inventory
reduced flexibility
higher-quality products
greater customer satisfaction
greater seasonality
technique.
Level of Difficulty: 2 Medium
Topic: Operations Strategy
136. Which of the following changes would tend to shorten the time frame for short-term
forecasting?
A.
B.
C.
D.
E.
137. Which of the following helps improve supply chain forecasting performance?
3-122
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McGraw-Hill Education.
A.
a reduction in demand variability
B.
a shortening of the forecast time horizon
C. an attempt to forecast demand for a group of similar items rather than an
individual item
D.
a change in the underlying causal system
Forecasting techniques generally assume that the same underlying causal system
that existed in the past will continue to exist in the future.
139. Which of the following is the most valuable piece of information the sales force can
bring into forecasting situations?
A.
what customers are most likely to do in the future
B.
what customers most want to do in the future
C.
what customers' future plans are
D. whether customers are satisfied or dissatisfied with their performance in the
past
E. what the salesperson's appropriate sales quota should be
Knowledge about what customers are likely to do is much more valuable than
information regarding what customers plan or want to do.
Essay Questions
3-123
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McGraw-Hill Education.
140. Develop a forecast for the next period, given the data below, using a three-period
moving average.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-124
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McGraw-Hill Education.
Using exponential smoothing with alpha = .2, and assuming the forecast for period
11 was 80, what would the forecast for period 14 be?
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
Feedback: The forecast error in the previous period is multiplied by the smoothing
constant. This is then added to the previous period's forecast to get the upcoming
period's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-125
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McGraw-Hill Education.
143. A manager is using the equation below to forecast quarterly demand for a product:
Yt = 6,000 + 80t where t = 0 at Q2 of last year
Quarter relatives are Q1 = .6, Q2 = .9, Q3 = 1.3, and Q4 = 1.2.
What forecasts are appropriate for the last quarter of this year and the first quarter
of next year?
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
144. Over the past five years, a firm's sales have averaged 250 units in the first quarter
of each year, 100 units in the second quarter, 150 units in the third quarter, and
300 units in the fourth quarter. What are appropriate quarter relatives for this firm's
sales? Hint: Only minimal computations are necessary.
Feedback: Since a trend is not present, quarter relatives are simply a percentage of
average, which is 200 units.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-13 Compute and use seasonal relatives.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-126
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McGraw-Hill Education.
145. A manager has been using a certain technique to forecast demand for gallons of ice
cream for the past six periods. Actual and predicted amounts are shown below.
Would a naive forecast have produced better results?
Current method: MAD = 3.67; MSE = 16.8; 2s control limits 8.2 (OK)
Naive method: MAD = 4.40; MSE = 30.0; 2s control limits 11.0 (OK)
Feedback: Either MSE or MAD should be computed for both forecasts and
compared. The demand data are stable. Therefore, the most recent value of the
series is a reasonable forecast for the next period of time, justifying the naive
approach. The current method is slightly superior both in terms of MAD and MSE.
Either method would be considered in control.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 3 Hard
Topic: Forecast Accuracy
3-127
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146. A new car dealer has been using exponential smoothing with an alpha of .2 to
forecast weekly new car sales. Given the data below, would a naive forecast have
provided greater accuracy? Explain. Assume an initial exponential forecast of 60
units in period 2 (i.e., no forecast for period 1).
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 3 Hard
Topic: Forecast Accuracy
3-128
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McGraw-Hill Education.
147. A CPA firm has been using the following equation to predict annual demand for tax
audits: Yt = 55 + 4t. Demand for the past few years is shown below. Is the forecast
performing as well as it might? Explain.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-15 Construct control charts and use them to monitor forecast errors.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-129
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McGraw-Hill Education.
148. Given the data below, develop a forecast for period 6 using a four-period weighted
moving average and weights of .4, .3, .2 and .1.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-09 Prepare a weighted-average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-130
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McGraw-Hill Education.
149. Use linear regression to develop a predictive model for demand for burial vaults
based on sales of caskets.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-14 Compute and use regression and correlation coefficients.
Level of Difficulty: 3 Hard
Topic: Associative Forecasting Techniques
3-131
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McGraw-Hill Education.
150. Given the following data, develop a linear regression model for y as a function of x.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-14 Compute and use regression and correlation coefficients.
Level of Difficulty: 2 Medium
Topic: Associative Forecasting Techniques
3-132
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McGraw-Hill Education.
151. Given the following data, develop a linear regression model for y as a function of x.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-14 Compute and use regression and correlation coefficients.
Level of Difficulty: 3 Hard
Topic: Associative Forecasting Techniques
3-133
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McGraw-Hill Education.
152. Develop a linear trend equation for the data on bread deliveries shown below.
Forecast deliveries for period 11 through 14.
Feedback: Formulate the regression equation using least squares estimation, then
apply the result to periods 11 through 14.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-14 Compute and use regression and correlation coefficients.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-134
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McGraw-Hill Education.
Feedback: The naive approach leads to absolute forecast errors of two units in each
period.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-135
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McGraw-Hill Education.
154. A manager wants to choose one of two forecasting alternatives. Each alternative
was tested using historical data. The resulting forecast errors for the two are shown
in the table. Analyze the data and recommend a course of action to the manager.
Although Alternative 1 has the smaller MSE, it appears to be cycling and steady;
Alternative 2 errors after the first three periods are small or zero. For the last six
periods, Alternative 2 was much better, suggesting that approach would be better.
Feedback: Although Alternative 1 has the smaller MSE, it appears to be cycling and
steady; Alternative 2 errors after the first three periods are small or zero. For the
last six periods, Alternative 2 was much better, suggesting that approach would be
better.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-05 Summarize forecast errors and use summaries to make decisions.
Level of Difficulty: 3 Hard
Topic: Forecast Accuracy
3-136
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McGraw-Hill Education.
155. A manager uses this equation to predict demand: Yt = 20 + 4t. Over the past eight
periods, demand has been as follows. Are the results acceptable? Explain.
s = 2.10; 2s control limits are 4.20. Although all values are within control limits,
the errors may be exhibiting cyclical patterns, which would suggest
nonrandomness.
Feedback: s = 2.10; 2s control limits are 4.20. Although all values are within
control limits, the errors may be exhibiting cyclical patterns, which would suggest
nonrandomness.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-15 Construct control charts and use them to monitor forecast errors.
Level of Difficulty: 2 Medium
Topic: Approaches to Forecasting
3-137
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McGraw-Hill Education.
156. Data on demand over the last few years are available as follows:
What would this year's forecast be if we were using the naive approach?
49
Feedback: This year's forecast would be last year's demand.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-07 Use a naive method to make a forecast.
Level of Difficulty: 1 Easy
Topic: Forecasts Based on Time-Series Data
3-138
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McGraw-Hill Education.
157. Data on demand over the last few years are available as follows:
45.5
Feedback: Average the four most recent periods of demand.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-08 Prepare a moving average forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-139
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McGraw-Hill Education.
158. Data on demand over the last few years are available as follows:
What is this year's forecast using exponential smoothing with alpha = .25, if last
year's smoothed forecast was 45?
45.8
Feedback: Multiply last year's forecast error by the smoothing constant. Add the
resulting product to last year's forecast to get this year's forecast.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-10 Prepare an exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-140
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McGraw-Hill Education.
159. Data on demand over the last few years are available as follows:
What are this and next year's forecasts using the least squares trend line for these
data?
62; 69
Feedback: Treat the earliest period as period 0 in formulating least squares
coefficients, then proceed.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-11 Prepare a linear trend forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-141
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McGraw-Hill Education.
160. Data on demand over the last few years are available as follows:
What is this year's forecast using trend-adjusted (double) smoothing with alpha = .
2 and beta = .1, if the forecast for last year was 56, the forecast for two years ago
was 46, and the trend estimate for last year's forecast was 7?
61.76
Feedback: Smooth both the trend and the forecasts using the appropriate
smoothing coefficients.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-12 Prepare a trend-adjusted exponential smoothing forecast.
Level of Difficulty: 3 Hard
Topic: Forecasts Based on Time-Series Data
3-142
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McGraw-Hill Education.
161. Data on the last three years of demand are available as follows:
What is the centered moving average for spring two years ago?
29
Feedback: First average the four periods beginning fall three years ago. Then
average the four periods beginning spring two years ago. Then average these two
averages.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-13 Compute and use seasonal relatives.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
162. Data on the last three years of demand are available as follows:
Spring = 0.91
Feedback: Divide data points by centered moving averages where moving averages
are available. Average the resulting values across the seasons to get the seasonal
relatives.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-13 Compute and use seasonal relatives.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-143
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163. Data on the last three years of demand are available as follows:
What is the linear regression trend line for these data (t = 0 for spring, three years
ago)?
y = 17 + 2.33t
Feedback: Used deseasonalized data points to formulate least squares coefficients.
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-12 Prepare a trend-adjusted exponential smoothing forecast.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
164. Data on the last three years of demand are available as follows:
AACSB: Analytic
Blooms: Apply
Learning Objective: 03-13 Compute and use seasonal relatives.
Level of Difficulty: 2 Medium
Topic: Forecasts Based on Time-Series Data
3-144
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McGraw-Hill Education.
3-145
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McGraw-Hill Education.