Chapter 10 - ForecastingChapter 10 Forecasting Answer Key Multiple-Choice Questions 1. A qualitative forecast would most likely be used for A. aggregate planning.B. scheduling.C. process design.D. inventory management.LO: 10.2Topic: Qualitative Forecasting MethodsDifficulty: 1 EasyAACSB: Reflective thinkingBloom’s: UnderstandFeedback: Qualitative methods typically are used for medium and long-range forecasting for decisions such as process design. 2. A regression model is an example of which type of forecasting method? A. CausalB. Historical analogyC. QualitativeD. Life cycle analogy LO: 10.5Topic: Causal Forecasting MethodsDifficulty: 1 EasyAACSB: Reflective thinkingBloom’s: RememberFeedback: One of the best-known causal methods is regression. 3. When should qualitative methods NOT be used? A. When historic data are unreliable.B. When it is impossible to obtain historic data.C. For short-range, repetitive decisions.D. When making major costly decisions, such as facilities location.LO: 10.2Topic: Qualitative Forecasting MethodsDifficulty: 1 EasyAACSB: Reflective thinkingBloom’s: RememberFeedback: Time series methods, not qualitative methods, are best suited to repetitive short-range forecasting. 11-1Chapter 10 - Forecasting 4. A small company that manufactures rubber boots is selecting a method to forecast demand for the next 10 years. The company recently expanded its facilities, doubling its capacity. Which of the following forecasting methods would be preferred? A. QualitativeB. Simple exponential smoothingC. EconometricD. Box-JenkinsLO: 10.2Topic: Qualitative Forecasting MethodsDifficulty: 2 ModerateAACSB: Reflective thinkingBloom’s: UnderstandFeedback: 10 years is a long-range application, so qualitative methods will be most applicable. 5. The difference between actual demand and the forecast is A. forecast error.B. mean absolute percentage error.C. absolute deviation of forecast error.D. mean absolute deviation of forecast error.LO: 10.4Topic: Forecast AccuracyDifficulty: 2 ModerateAACSB: Reflective thinkingBloom’s: UnderstandFeedback: Error for a given period equals the actual demand minus the forecast demand for that period. 6. If a sales representative tells his or her manager, "I hope to sell 20% more than last year," this should be considered A. a forecast.B. a performance measure.C. a goal.D. a production plan.LO: 10.1Topic: Forecasting for Decision MakingDifficulty: 1 EasyAACSB: Reflective thinkingBloom’s: RememberFeedback: Forecasting deals with what we think will happen. A hope to sell more is best described as a goal. 7. Given the following weekly demand figures, 11-2Chapter 10 - ForecastingWeek Demand1 202 603 304 205 40 using a three-week moving average, what is your forecast for week 6? A. 30B. 36.7C. 32.5D. 25LO: 10.3Topic: Moving AverageDifficulty: 2 ModerateAACSB: Application of knowledgeBloom’s: ApplyFeedback: 30 (week 3) + 20 (week 4) + 40 (week 5) = 90. 90/3 = 30. 8. What is the exponentially smoothed forecast for week 2? (Use F1 = 25 and alpha = 0.2.) A. 21B. 24C. 32D. 53LO: 10.3Topic: Exponential SmoothingDifficulty: 1 EasyAACSB: Application of knowledgeBloom’s: ApplyFeedback: F2 = F1 + alpha(D1 – F1) = 25 + 0.2(25 – 20) = 24. 9. What is the exponentially smoothed forecast for week 6? (Use F5 = 33 and alpha = 0.0.) A. 33B. 31.7C. 30D. 20LO: 10.3Topic: Exponential SmoothingDifficulty: 2 ModerateAACSB: Application of knowledgeBloom’s: ApplyFeedback: F2 = F1 + alpha(D1 – F1) = 33 + 0.0(35 – 40) = 33. 11-3Chapter 10 - Forecasting 10. Given the following information for period 15, what will be the smoothed mean absolute deviation for period 16? Demand = 120Forecast = 180MAD15 = 50Alpha = 0.3 A. 77B. 53C. 17D. 43LO: 10.4Topic: Forecast AccuracyDifficulty: 3 HardAACSB: Application of knowledgeBloom’s: ApplyFeedback: MADt = alpha(absolute value Dt – Ft) + (1 – alpha)MADt-1 = 0.3(60) + 0.7(50) = 53. 11. The Grand Bakery produces 60 special sourdough rolls every day. Any rolls that are not sold each day are given to the employees. The bakery collected sales data from the past week:Day Rolls Sold1 502 503 484 605 536 60What is the value of F6 if the bakery uses a 3-day weighted moving average with W1 = 0.6, W2 = 0.2, and W3 = 0.2? A. 51.4B. 53.4C. 58.6D. None of the aboveLO: 10.3Topic: Moving AverageDifficulty: 1 EasyAACSB: Application of knowledgeBloom’s: ApplyFeedback: 0.6(53) + 0.2(60) + 0.2(48) = 53.4. 11-4Chapter 10 - Forecasting 12. Using the data from Question 11, calculate the forecast for period 7 using a four-period moving average: A. 60B. 43.25C. 57.75D. 55.25LO: 10.4Topic: Forecast AccuracyDifficulty: 1 EasyAACSB: Application of knowledgeBloom’s: ApplyFeedback: 48 + 60 + 53 + 60 = 221. 221/4 = 55.25. 13. Which of the following is NOT a measure of forecast accuracy? A. Mean square error.B. Cumulative sum of forecast error.C. Mean absolute deviation of forecast error.D. Cumulative absolute deviation of forecast error.LO: 10.4Topic: Forecast AccuracyDifficulty: 2 ModerateAACSB: Reflective thinkingBloom’s: UnderstandFeedback: A. B. and C are measures of forecast accuracy (see Section 10.6). 14. Which phrase most closely describes the Delphi forecasting technique? A. Consumer survey.B. Individual opinions.C. Rounds of anonymous data collection.D. Test markets. LO: 10.2Topic: Qualitative ForecastingDifficulty: 2 ModerateAACSB: Reflective thinkingBloom’s: UnderstandFeedback: The Delphi technique collects input from panel members, feeds information back to the members, and follows with another round of anonymous input.11-5Chapter 10 - Forecasting 15. Which of the following statements is/are true about time series forecasting? A. The basic strategy is to identify the magnitude and form of each component based on available past data.B. It is used to make detailed analyses of past demand patterns over time and to project these patterns forward into the future.C. Demand can be divided into components such as average level, trend, seasonality, cycle and error.D. All of the above. LO: 10.3Topic: Time Series ForecastingDifficulty: 3 HardAACSB: Reflective thinkingBloom’s: UnderstandFeedback: All are true (see Section 10.3). 16. Using exponential smoothing, if we want forecasts to be very responsive to recent demand, the value of alpha should be A. large.B. moderate. C. small.D. The value of alpha does not matter.LO: 10.2Topic: Exponential SmoothingDifficulty: 2 ModerateAACSB: Reflective thinkingBloom’s: