Operations and Supply Chain Management The Core 3rd Edition Jacobs Test Bank

Operations And Supply Chain Management The Core 3rd Edition Jacobs Test Bank
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Chapter 03
Forecasting
True / False Questions
1. Continual review and updating in light of new data is a forecasting technique
called second-guessing.
True False
2. Cyclical influences on demand are often expressed graphically as a linear
function that is either upward or downward sloping.
True False
3. Cyclical influences on demand may come from occurrences such as political
elections, war or economic conditions.
True False
4. Trend lines are usually the last things considered when developing a forecast.
True False
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5. Time series forecasting models make predictions about the future based on
analysis of past data.
True False
6. In the weighted moving average forecasting model the weights must add up to
one times the number of data points.
True False
7. In a forecasting model using simple exponential smoothing the data pattern
should remain stationary.
True False
8. In a forecasting model using simple moving average the shorter the time span
used for calculating the moving average, the closer the average follows volatile
trends.
True False
9. In the simple exponential smoothing forecasting model you need at least 30
observations to set the smoothing constant alpha.
True False
10. Experience and trial and error are the simplest ways to choose weights for the
weighted moving average forecasting model.
True False
11. Bayesian analysis is the simplest way to choose weights for the weighted moving
average forecasting model.
True False
12. The weighted moving average forecasting model uses a weighting scheme to
modify the effects of individual data points. This is its major advantage over the
simple moving average model.
True False
13. A central premise of exponential smoothing is that more recent data is less
indicative of the future than data from the distant past.
True False
14. The equation for exponential smoothing states that the new forecast is equal to
the old forecast plus the error of the old forecast.
True False
15. Exponential smoothing is always the best and most accurate of all forecasting
models.
True False
16. In exponential smoothing, it is desirable to use a higher smoothing constant when
forecasting demand for a product experiencing high growth.
True False
17. The value of the smoothing constant alpha in an exponential smoothing model is
between 0 and 1.
True False
18. Simple exponential smoothing lags changes in demand.
True False
19. Exponential smoothing forecasts always lag behind the actual occurrence but can
be corrected somewhat with a trend adjustment.
True False
20. Because the factors governing demand for products are very complex, all
forecasts of demand contain error.
True False
21. Random errors can be defined as those that cannot be explained by the forecast
model being used.
True False
22. There are no differences in strategic and tactical forecasting. A forecast is a
mathematical projection and its ultimate purpose should make no difference to the
analyst.
True False
23. Random errors in forecasting occur when an undetected secular trend is not
included in a forecasting model.
True False
24. When forecast errors occur in a normally distributed pattern, the ratio of the mean
absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1 standard
deviation.
True False
25. MAD statistics can be used to generate tracking signals.
True False
26. RSFE in forecasting stands for "reliable safety function error."
True False
27. In forecasting, RSFE stands for "running sum of forecast errors."
True False
28. A tracking signal (TS) can be calculated using the arithmetic sum of forecast
deviations divided by the MAD.
True False
29. A restriction in using linear regression is that it assumes that past data and future
projections fall on or near a straight line.
True False
30. Regression is a functional relationship between two or more correlated variables,
where one variable is used to predict another.
True False
31. Linear regression is not useful for aggregate planning.
True False
32. The standard error of the estimate of a linear regression is not useful for judging
the fit between the data and the regression line when doing forecasts.
True False
33. Multiple regression analysis uses several regression models to generate a
forecast.
True False
34. For every forecasting problem there is one best forecasting technique.
True False
35. A good forecaster is one who develops special skills and experience at one
forecasting technique and is capable of applying it to widely diverse situations.
True False
36. In causal relationship forecasting leading indicators are used to forecast
occurrences.
True False
37. Qualitative forecasting techniques generally take advantage of the knowledge of
experts and therefore do not require much judgment.
True False
38. Market research is a quantitative method of forecasting.
True False
39. Decomposition of a time series means identifying and separating the time series
data into its components.
True False
40. A time series is defined in the text as chronologically ordered data that may
contain one or more components of demand variation: trend, seasonal, cyclical,
autocorrelation, and random.
True False
41. It is difficult to identify the trend in time series data.
True False
42. In decomposition of time series data it is relatively easy identify cycles and
autocorrelation components.
True False
43. We usually associate the word "seasonal" with recurrent periods of repetitive
activity that happen on other than an annual cycle.
True False
Multiple Choice Questions
44. In time series data depicting demand which of the following is not considered a
component of demand variation?
A. Trend
B. Seasonal
C. Cyclical
D. Variance
E. Autocorrelation
45. Which of the following is not one of the basic types of forecasting?
A. Qualitative
B. Time series analysis
C. Causal relationships
D. Simulation
E. Force field analysis
46. In most cases, demand for products or services can be broken down into several
components. Which of the following is not considered a component of demand?
A. Average demand for a period
B. A trend
C. Seasonal elements
D. Past data
E. Autocorrelation
47. In most cases, demand for products or services can be broken into several
components. Which of the following is considered a component of demand?
A. Cyclical elements
B. Future demand
C. Past demand
D. Inconsistent demand
E. Level demand
A. Forecast error
B. Autocorrelation
C. Previous demand
D. Consistent demand
E. Repeat demand
49. Which of the following forecasting methodologies is considered a qualitative
forecasting technique?
A. Simple moving average
B. Market research
C. Linear regression
D. Exponential smoothing
E. Multiple regression
50. Which of the following forecasting methodologies is considered a time series
B. Market research
C. Leading indicators
D. Historical analogy
E. Simulation
A. Delphi method
B. Exponential averaging
C. Simple movement smoothing
D. Weighted moving average
E. Simulation
52. Which of the following forecasting methodologies is considered a causal
A. Exponential smoothing
B. Weighted moving average
E. Market research
53. Which of the following forecasting methods uses executive judgment as its
primary component for forecasting?
A. Historical analogy
C. Panel consensus
D. Market research
E. Linear regression
54. Which of the following forecasting methods is very dependent on selection of the
right individuals who will judgmentally be used to actually generate the forecast?
A. Time series analysis
B. Simple moving average
C. Weighted moving average
D. Delphi method
E. Panel consensus
55. In business forecasting, what is usually considered a short-term time period?
A. Four weeks or less
B. More than three months
C. Six months or more
D. Less than three months
E. One year
56. In business forecasting, what is usually considered a medium-term time period?
A. Six weeks to one year
B. Three months to two years
C. One to five years
D. One to six months
E. Six months to six years
57. In business forecasting, what is usually considered a long-term time period?
A. Three months or longer
B. Six months or longer
C. One year or longer
D. Two years or longer
E. Ten years or longer

58. In general, which forecasting time frame compensates most effectively for random
variation and short term changes?
A. Short-term forecasts
B. Quick-time forecasts
C. Long range forecasts
D. Medium term forecasts
E. Rapid change forecasts
59. In general, which forecasting time frame best identifies seasonal effects?
60. In general, which forecasting time frame is best to detect general trends?

61. Which of the following forecasting methods can be used for short-term
forecasting?
A. Simple exponential smoothing
B. Delphi technique
C. Market research
D. Hoskins-Hamilton smoothing
E. Serial regression
62. Which of the following considerations is not a factor in deciding which forecasting
model a firm should choose?
A. Time horizon to forecast
B. Product
C. Accuracy required
D. Data availability
E. Analyst availability
63. A company wants to forecast demand using the simple moving average. If the
company uses four prior yearly sales values (i.e., year 2010 = 100, year 2011 =
120, year 2012 = 140, and year 2013 = 210), which of the following is the simple
moving average forecast for year 2014?
A. 100.5
B. 140.0
C. 142.5
D. 145.5
E. 155.0
company uses three prior yearly sales values (i.e., year 2011 = 130, year 2012 =
110, and year 2013 =160), which of the following is the simple moving average
forecast for year 2014?
A. 100.5
B. 122.5
C. 133.3
D. 135.6
E. 139.3
65. A company wants to forecast demand using the weighted moving average. If the
company uses two prior yearly sales values (i.e., year 2012 = 110 and year 2013
= 130), and we want to weight year 2012 at 10% and year 2013 at 90%, which of
the following is the weighted moving average forecast for year 2014?
A. 120
B. 128
C. 133
D. 138
E. 142
140 and year 2013 = 170), and we want to weight year 2011 at 30%, year 2012 at
30% and year 2013 at 40%, which of the following is the weighted moving
average forecast for year 2014?
A. 170
B. 168
C. 158
D. 152
E. 146
67. The exponential smoothing method requires which of the following data to
forecast the future?
A. The most recent forecast
B. Precise actual demand for the past several years
C. The value of the smoothing constant delta
D. Overall industry demand data
E. Tracking values
68. Given a prior forecast demand value of 230, a related actual demand value of
250, and a smoothing constant alpha of 0.1, what is the exponential smoothing
forecast value for the following period?
A. 230
B. 232
C. 238
D. 248
E. 250
69. If a firm produced a standard item with relatively stable demand, the smoothing
constant alpha (reaction rate to differences) used in an exponential smoothing
forecasting model would tend to be in which of the following ranges?
A. 5 % to 10 %
B. 20 % to 50 %
C. 20 % to 80 %
D. 60 % to 120 %
E. 90 % to 100 %
70. If a firm produced a product that was experiencing growth in demand, the
smoothing constant alpha (reaction rate to differences) used in an exponential
smoothing forecasting model would tend to be which of the following?
A. Close to zero
B. A very low percentage, less than 10%
C. The more rapid the growth, the higher the percentage
D. The more rapid the growth, the lower the percentage
E. 50 % or more
71. Given a prior forecast demand value of 1,100, a related actual demand value of
1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing
forecast value?
A. 1,000
B. 1,030
C. 1,070
D. 1,130
E. 970
72. A company wants to generate a forecast for unit demand for year 2014 using
exponential smoothing. The actual demand in year 2013 was 120. The forecast
demand in year 2013 was 110. Using this data and a smoothing constant alpha of
0.1, which of the following is the resulting year 2014 forecast value?
A. 100
B. 110
C. 111
D. 114
E. 120
73. As a consultant you have been asked to generate a unit demand forecast for a
product for year 2014 using exponential smoothing. The actual demand in year
2013 was 750. The forecast demand in year 2013 was 960. Using this data and a
smoothing constant alpha of 0.3, which of the following is the resulting year 2014
forecast value?
A. 766
B. 813
C. 897
D. 1,023
E. 1,120
74. Which of the following is a possible source of bias error in forecasting?
A. Failing to include the right variables
B. Using the wrong forecasting method
C. Employing less sophisticated analysts than necessary
D. Using incorrect data
E. Using standard deviation rather than MAD

75. Which of the following are used to describe the degree of error?
A. Weighted moving average
B. Regression
C. Moving average
D. Forecast as a percent of actual
E. Mean absolute deviation
76. A company has actual unit demand for three consecutive years of 124, 126, and
135. The respective forecasts for the same three years are 120, 120, and 130.
Which of the following is the resulting MAD value that can be computed from this
data?
A. 1
B. 3
C. 5
D. 15
E. 123
77. A company has actual unit demand for four consecutive years of 100, 105, 135,
and 150. The respective forecasts were 120 for all four years. Which of the
following is the resulting MAD value that can be computed from this data?
A. 2.5
B. 10
C. 20
D. 22.5
E. 30
78. If you were selecting from a variety of forecasting models based on MAD, which
of the following MAD values from the same data would reflect the most accurate
model?
A. 0.2
B. 0.8
C. 1.0
D. 10.0
E. 100.0
79. A company has calculated its running sum of forecast errors to be 500 and its
mean absolute deviation is exactly 35. Which of the following is the company's
tracking signal?
A. Cannot be calculated based on this information
B. About 14.3
C. More than 35
D. Exactly 35
E. About 0.07
80. A company has a MAD of 10. Its wants to have a 99.7 percent control limits on its
forecasting system. It's most recent tracking signal value is 3.1. What can the
company conclude from this information?
A. The forecasting model is operating acceptably
B. The forecasting model is out of control and needs to be corrected
C. The MAD value is incorrect
D. The upper control value is less than 20
E. It is using an inappropriate forecasting methodology

81. You are hired as a consultant to advise a small firm on forecasting methodology.
Based on your research you find the company has a MAD of 3. Its wants to have
a 99.7 percent control limits on its forecasting system. It's most recent tracking
signal value is 15. What should be your report to the company?
E. The company is using an inappropriate forecasting methodology
82. Which of the following is the portion of observations you would expect to see lying
within a plus or minus 3 MAD range?
A. 57.05 percent
B. 88.95 percent
C. 98.36 percent
D. 99.85 percent
E. 100 percent
83. Which of the following is the portion of observations you would expect to see lying
within a plus or minus 2 MAD range?
A. 57.04
B. 89.04
C. 98.33
D. 99.86
E. 100.00
84. If the intercept value of a linear regression model is 40, the slope value is 40, and
the value of X is 40, which of the following is the resulting forecast value using
this model?
A. 120
B. 1,600
C. 1,640
D. 2,200
E. 64,000
85. A company hires you to develop a linear regression forecasting model. Based on
the company's historical sales information, you determine the intercept value of
the model to be 1,200. You also find the slope value is minus 50. If after
developing the model you are given a value of X = 10, which of the following is
the resulting forecast value using this model?
A. - 1,800
B. 700
C. 1,230
D. 1,150
E. 12,000
86. Heavy sales of umbrellas during a rain storm is an example of which of the
following?
A. A trend
B. A causal relationship
C. A statistical correlation
D. A coincidence
E. A fad
87. You are using an exponential smoothing model for forecasting. The running sum
of the forecast error statistics (RSFE) are calculated each time a forecast is
generated. You find the last RSFE to be 34. Originally the forecasting model used
was selected because it's relatively low MAD of 0.4. To determine when it is time
to re-evaluate the usefulness of the exponential smoothing model you compute
tracking signals. Which of the following is the resulting tracking signal?
A. 85
B. 60
C. 13.6
D. 12.9
E. 8
Fill in the Blank Questions
88. Name the four basic types of forecasting.
1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
________________________________________
mean absolute deviation is exactly 25. What is the company's tracking signal?
_________________________________
________________________________________
90. A company has calculated its running sum of forecast errors to be 1,000 and its
tracking signal is 50. What is the company's mean absolute deviation?
_________________________________
________________________________________
215, and year 2013 =230), what is the simple moving average forecast for year
2014? __________________________________
________________________________________
company uses two prior yearly sales values (i.e., year 2012 = 11,000 and year
2013 = 13,000), and we want to weight year 2012 at 35% and year 2013 at 65%,
what is the weighted moving average forecast for Year 2014?
__________________________________________
________________________________________
product for Year 2014 using exponential smoothing. Actual demand in year 2013
was 950 but the forecast for that year 1,060. Using this data and a smoothing
constant alpha of 0.5, which of the following is the resulting year 2014 forecast
value? ________________________________________
________________________________________
94. A company has had actual unit demand for four consecutive years of 100, 110,
125, and 150. The respective forecasts using exponential smoothing were 120 for
each of those four years. What value of alpha, the smoothing constant, was the
firm using? ____________________________________
________________________________________
95. What are the five steps of CPFR (collaborative planning, forecasting and
replenishment?)
1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
5. ______________________________
________________________________________
96. When analyzing time series data, if demand data contains both seasonal and
trend effects at the same time, what are the two ways that they can relate to each
other discussed in the text?
1) ___________________________
2) ___________________________
________________________________________
97. What do we call forecasts that are for very high-level demand analysis?
_______________________________________
________________________________________
98. What do we call forecasts needed for how a firm operates on a day-to-day basis?
_______________________________________
________________________________________
Essay Questions
99. What does the text mean when it states that rather than to search for the perfect
forecast one should learn to live with inaccurate forecasts?
100.Describe the collaborative planning, forecasting and replenishment (CPFR)
technique.
101.Distinguish between strategic and tactical forecasts.
Chapter 03 Forecasting Answer Key
True / False Questions
1. Continual review and updating in light of new data is a forecasting technique

(p. 50)
called second-guessing.
FALSE
Second guessing is not a forecasting technique.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-01 Understand the role of forecasting as a basis for supply chain planning.
Topic: Types of Forecasting
2. Cyclical influences on demand are often expressed graphically as a linear
(p. 50)
function that is either upward or downward sloping.
FALSE
By their nature, cyclical influences are non-linear.
AACSB: Reflective Thinking

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-02 Identify the basic components of demand: average; trend; seasonal; and random variation.
Topic: Components of Demand
3. Cyclical influences on demand may come from occurrences such as political

(p. 51)
elections, war or economic conditions.
TRUE
Cyclical influence on demand may come from such occurrences as political
elections, war, economic conditions, or sociological pressures.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
4. Trend lines are usually the last things considered when developing a forecast.
(p. 51)
FALSE
Trend lines are the usual starting point in developing a forecast.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
5. Time series forecasting models make predictions about the future based on
(p. 52)
analysis of past data.
TRUE
Time series forecasting models try to predict the future based on past data.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Show how to make a time series forecast using moving averages; exponential smoothing; and
regression.
Topic: Time Series Analysis
6. In the weighted moving average forecasting model the weights must add up to
(p. 54)
one times the number of data points.
FALSE
A weighted moving average (model) allows any weights to be placed on each
element, providing, of course, that the sum of all weights equals 1 (one).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
7. In a forecasting model using simple exponential smoothing the data pattern

(p. 52)
should remain stationary.
TRUE
See exhibit 3.3
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
8. In a forecasting model using simple moving average the shorter the time span
(p. 53)
used for calculating the moving average, the closer the average follows volatile
trends.
TRUE
While a shorter time span produces more oscillation, there is a closer following
of the trend. Conversely, a longer time span gives a smoother response but
lags the trend.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
9. In the simple exponential smoothing forecasting model you need at least 30
(p. 56)
observations to set the smoothing constant alpha.
FALSE
In the exponential smoothing method, only three pieces of data are needed to
forecast the future: the most recent forecast, the actual demand that occurred
for that forecast period, and a smoothing constant alpha. This smoothing
constant determines the level of smoothing and the speed of reaction to
differences between forecasts and actual occurrences. The value for the
constant is determined both by the nature of the product and by the manager's
sense of what constitutes a good response rate.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
10. Experience and trial and error are the simplest ways to choose weights for the
(p. 55)
TRUE
Experience and trial and error are the simplest ways to choose weights for the
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
11. Bayesian analysis is the simplest way to choose weights for the weighted
(p. 55)
moving average forecasting model.
FALSE
Experience and trial and error are the simplest ways to choose weights for the
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
12. The weighted moving average forecasting model uses a weighting scheme to
(p. 54)
modify the effects of individual data points. This is its major advantage over the
simple moving average model.
TRUE
The weighted moving average has a definite advantage over the simple moving
average in being able to vary the effects of past data.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
13. A central premise of exponential smoothing is that more recent data is less
(p. 55)
indicative of the future than data from the distant past.
FALSE
If the premise that the importance of data diminishes as the past becomes
more distant is valid then exponential smoothing may be the most logical and
easiest method to use.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
14. The equation for exponential smoothing states that the new forecast is equal to
(p. 56)
the old forecast plus the error of the old forecast.
FALSE
The equation for exponential smoothing states that the new forecast is equal to
the old forecast plus a portion of the error (the difference between the previous
forecast and what actually occurred).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
15. Exponential smoothing is always the best and most accurate of all forecasting
(p. 49)
models.
FALSE
No model is best and most accurate in every situation. That is why there are so
many models. A perfect forecast is virtually impossible. Too many factors in the
business environment cannot be predicted with certainty. Therefore, rather
than search for the perfect forecast, it is far more important to establish the
practice of continual review of forecasts and to learn to live with inaccurate
forecasts.
AACSB: Analytic
Blooms: Create
Difficulty: 1 Easy
Topic: From Bean to Cup: Starbucks Global Supply Chain Challenge
16. In exponential smoothing, it is desirable to use a higher smoothing constant

(p. 56)
when forecasting demand for a product experiencing high growth.
TRUE
The more rapid the growth, the higher the reaction rate (e.g., smoothing
constant) should be.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
17. The value of the smoothing constant alpha in an exponential smoothing model
(p. 59)
is between 0 and 1.
TRUE
Exponential smoothing requires that the smoothing constant alpha be given a

value between 0 and 1.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
18. Simple exponential smoothing lags changes in demand.

(p. 57)
TRUE
Single exponential smoothing has the shortcoming of lagging changes in
demand.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
19. Exponential smoothing forecasts always lag behind the actual occurrence but
(p. 57)
can be corrected somewhat with a trend adjustment.
TRUE
The forecast lags during an increase or decrease but overshoots when a
change in direction occurs. To more closely track actual demand, a trend factor
may be added.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
20. Because the factors governing demand for products are very complex, all
(p. 69)
forecasts of demand contain error.
TRUE
Demand for a product is generated through the interaction of a number of
factors too complex to describe accurately in a model. Therefore, all forecasts
certainly contain some error.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-05 Show how to measure forecast error.
21. Random errors can be defined as those that cannot be explained by the
(p. 70)
forecast model being used.
TRUE
Random errors can be defined as those that cannot be explained by the
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
22. There are no differences in strategic and tactical forecasting. A forecast is a
(p. 48)
mathematical projection and its ultimate purpose should make no difference to
the analyst.
FALSE
In considering what forecasting approach to use it is important to consider the
purpose of the forecast. Some forecasts are for very high-level demand
analysis. What do we expect the demand to be for a group of products over the
next year, for example? Some forecasts are used to help set the strategy of
how, in an aggregate sense, we will meet demand. We will call these strategic
forecasts. Forecasts are also needed for how a firm operates processes on a
day-to-day basis. For example, when should the inventory for an item be
replenished, or how much production should we schedule for an item next
week? These are tactical forecasts where the goal is to estimate demand in the
relative short term, a few weeks or months.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
23. Random errors in forecasting occur when an undetected secular trend is not
(p. 70)
included in a forecasting model.
FALSE
Random errors can be defined as those that cannot be explained by the
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
24. When forecast errors occur in a normally distributed pattern, the ratio of the
(p. 70)
mean absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1
standard deviation.
FALSE
When the errors that occur in the forecast are normally distributed (the usual
case,) the mean absolute deviation (MAD) relates to the standard deviation as:
one standard deviation = 1.25 MAD.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
25. MAD statistics can be used to generate tracking signals.
(p. 70)
TRUE
In recent years, MAD has made a comeback because of its simplicity and
usefulness in obtaining tracking signals.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
26. RSFE in forecasting stands for "reliable safety function error."

(p. 71)
FALSE
RSFE (stands for) running sum of forecast errors.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
27. In forecasting, RSFE stands for "running sum of forecast errors."
(p. 71)
TRUE
RSFE (stands for ) running sum of forecast errors.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
28. A tracking signal (TS) can be calculated using the arithmetic sum of forecast
(p. 71)
deviations divided by the MAD.
TRUE
A tracking signal can be calculated using the arithmetic sum of forecast
deviations divided by the mean absolute deviation
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
29. A restriction in using linear regression is that it assumes that past data and
(p. 59)
future projections fall on or near a straight line.
TRUE
The major restriction in using linear regression forecasting is, as the name
implies, that past data and future projections are assumed to fall about a
straight line.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
30. Regression is a functional relationship between two or more correlated

(p. 59)
variables, where one variable is used to predict another.
TRUE
Regression can be defined as a functional relationship between two or more
correlated variables. It is used to predict one variable given the other.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
31. Linear regression is not useful for aggregate planning.
(p. 59)
FALSE
Linear regression is useful for long-term forecasting of major occurrences and
aggregate planning.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
32. The standard error of the estimate of a linear regression is not useful for
(p. 62)
judging the fit between the data and the regression line when doing forecasts.
FALSE
The standard error of estimate indicates how well the line fits the data.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
33. Multiple regression analysis uses several regression models to generate a
(p. 74)
forecast.
FALSE
Multiple regression analysis, (is where) a number of variables are considered,
together with the effects of each on the item of interest.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
Topic: Causal Relationship Forecasting
34. For every forecasting problem there is one best forecasting technique.
(p. 50)
FALSE
When forecasting, a good strategy is to use two or three methods and look at
them for the commonsense view.

Blooms: Remember
Difficulty: 1 Easy
35. A good forecaster is one who develops special skills and experience at one
(p. 50)
forecasting technique and is capable of applying it to widely diverse situations.
FALSE
When forecasting, a good strategy is to use two or three methods and look at
them for the commonsense view.

Blooms: Remember
Difficulty: 1 Easy
36. In causal relationship forecasting leading indicators are used to forecast

(p. 73)
occurrences.
FALSE
Often leading indicators are not causal relationships, but in some indirect way,
they may suggest that some other things might happen.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
37. Qualitative forecasting techniques generally take advantage of the knowledge
(p. 75)
of experts and therefore do not require much judgment.
FALSE
Qualitative forecasting techniques generally take advantage of the knowledge
of experts and require much judgment.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-06 Describe the common qualitative forecasting techniques; such as the Delphi method and
collaborative forecasting.
Topic: Qualitative Techniques in Forecasting
38. Market research is a quantitative method of forecasting.

(p. 75)
FALSE
Market research is used mostly for product research in the sense of looking for
new product ideas, likes and dislikes about existing products, which
competitive products within a particular class are preferred, and so on. Again,
the data collection methods are primarily surveys and interviews. It is a
discussed under the qualitative techniques in forecasting topic area.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
39. Decomposition of a time series means identifying and separating the time
(p. 63)
series data into its components.
TRUE
Decomposition of a time series means identifying and separating the time
series data into its components.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Use decomposition to forecast when trend and seasonality is present.
40. A time series is defined in the text as chronologically ordered data that may
(p. 63)
contain one or more components of demand variation: trend, seasonal, cyclical,
autocorrelation, and random.
TRUE
A time series can be defined as chronologically ordered data that may contain
one or more components of demand: trend, seasonal, cyclical, autocorrelation,
and random
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
41. It is difficult to identify the trend in time series data.
(p. 63)
FALSE
In practice, it is relatively easy to identify the trend and the seasonal
component (by comparing the same period year to year).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
42. In decomposition of time series data it is relatively easy identify cycles and
(p. 63)
autocorrelation components.
FALSE
It is considerably more difficult (than trend detection) to identify the cycles,
autocorrelation, and random components.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
43. We usually associate the word "seasonal" with recurrent periods of repetitive
(p. 64)
activity that happen on other than an annual cycle.
FALSE
We usually associate seasonal with a period of the year characterized by some
particular activity. We use the word cyclical to indicate other than annual
recurrent periods of repetitive activity.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Multiple Choice Questions

44. In time series data depicting demand which of the following is not considered a
(p. 70)
component of demand variation?
A. Trend
B. Seasonal
C. Cyclical
D. Variance
E. Autocorrelation
Variance is a measure of the degree of error, not a component of demand
variation. E.g., Several common terms used to describe the degree of error are
standard error, mean squared error (or variance), and mean absolute deviation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
45. Which of the following is not one of the basic types of forecasting?
(p. 50)
A. Qualitative
C. Causal relationships
D. Simulation
E. Force field analysis
Forecasting can be classified into four basic types: qualitative, time series
analysis, causal relationships, and simulation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
46. In most cases, demand for products or services can be broken down into
(p. 50)
several components. Which of the following is not considered a component of
demand?
A. Average demand for a period
B. A trend
C. Seasonal elements
D. Past data
E. Autocorrelation
In most cases, demand for products or services can be broken down into six
components: average demand for the period, a trend, seasonal elements,
cyclical elements, random variation, and autocorrelation.
AACSB: Analytic
Blooms: Remember
(p. 50)
A. Cyclical elements
B. Future demand
C. Past demand
D. Inconsistent demand
E. Level demand
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
(p. 50)
A. Forecast error
B. Autocorrelation
C. Previous demand
D. Consistent demand
E. Repeat demand
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
49. Which of the following forecasting methodologies is considered a qualitative
(p. 75)
B. Market research
D. Exponential smoothing
E. Multiple regression
Market research is used mostly for product research in the sense of looking for
new product ideas, likes and dislikes about existing products, which
competitive products within a particular class are preferred, and so on. Again,
the data collection methods are primarily surveys and interviews. It is a
discussed under the qualitative techniques in forecasting topic area.

Blooms: Remember
Difficulty: 1 Easy
(p. 52)
B. Market research
C. Leading indicators
E. Simulation
Simple moving average is the only choice that attempts to predict future values
of demand based upon past data.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
(p. 52)
A. Delphi method
B. Exponential averaging
C. Simple movement smoothing
D. Weighted moving average
E. Simulation
Weighted moving average is the only choice that attempts to predict future
values of demand based upon past data.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
52. Which of the following forecasting methodologies is considered a causal
(p. 50)
A. Exponential smoothing
B. Weighted moving average
E. Market research
Causal forecasting, which we discuss using the linear regression technique,
assumes that demand is related to some underlying factor or factors in the
environment.
AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
regression.
53. Which of the following forecasting methods uses executive judgment as its
(p. 75)
primary component for forecasting?
A. Historical analogy
C. Panel consensus
D. Market research
E. Linear regression
In a panel consensus, the idea that two heads are better than one is
extrapolated to the idea that a panel of people from a variety of positions can
develop a more reliable forecast than a narrower group. Panel forecasts are
developed through open meetings with free exchange of ideas from all levels of
management and individuals. When decisions in forecasting are at a broader,
higher level (as when introducing a new product line or concerning strategic
product decisions such as new marketing areas), the term executive judgment
is generally used.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
54. Which of the following forecasting methods is very dependent on selection of
(p. 76)
the right individuals who will judgmentally be used to actually generate the
forecast?
A. Time series analysis
B. Simple moving average
C. Weighted moving average
D. Delphi method
E. Panel consensus
The step-by-step procedure for the Delphi method is: 1. Choose the experts to
participate. There should be a variety of knowledgeable people in different
areas.
AACSB: Analytic
Blooms: Understand
55. In business forecasting, what is usually considered a short-term time period?
(p. 52)
A. Four weeks or less
B. More than three months
C. Six months or more
D. Less than three months
E. One year
In business forecasting short term usually refers to under three months.
AACSB: Analytic
Blooms: Remember
regression.
56. In business forecasting, what is usually considered a medium-term time
(p. 52)
period?
A. Six weeks to one year
B. Three months to two years
C. One to five years
D. One to six months
E. Six months to six years
In business forecasting medium term (refers to) three months to two years.
AACSB: Analytic
Blooms: Remember
regression.
57. In business forecasting, what is usually considered a long-term time period?
(p. 52)
A. Three months or longer
B. Six months or longer
C. One year or longer
D. Two years or longer
E. Ten years or longer
In business forecasting long term (refers to) greater than two years.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
58. In general, which forecasting time frame compensates most effectively for
(p. 52)
random variation and short term changes?
In general, the short-term models compensate for random variation and adjust
for short-term changes (such as consumers' responses to a new product).
AACSB: Analytic
Blooms: Understand
regression.
59. In general, which forecasting time frame best identifies seasonal effects?
(p. 52)
Medium-term forecasts are useful for capturing seasonal effects.
AACSB: Analytic
Blooms: Understand
regression.
60. In general, which forecasting time frame is best to detect general trends?
(p. 52)
Long-term models detect general trends and are especially useful in identifying
major turning points.
AACSB: Analytic
Blooms: Remember
regression.
61. Which of the following forecasting methods can be used for short-term
(p. 52)
forecasting?
A. Simple exponential smoothing
B. Delphi technique
C. Market research
D. Hoskins-Hamilton smoothing
E. Serial regression
See exhibit 3.3
AACSB: Analytic
Blooms: Understand
regression.
62. Which of the following considerations is not a factor in deciding which
(p. 53)
forecasting model a firm should choose?
A. Time horizon to forecast
B. Product
C. Accuracy required
D. Data availability
E. Analyst availability
Which forecasting model a firm should choose depends on: (1) Time horizon to
forecast; (2) Data availability; (3) Accuracy required; (4) Size of forecasting
budget; (5) Availability of qualified personnel.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
(p. 53)
company uses four prior yearly sales values (i.e., year 2010 = 100, year 2011 =
120, year 2012 = 140, and year 2013 = 210), which of the following is the
simple moving average forecast for year 2014?
A. 100.5
B. 140.0
C. 142.5
D. 145.5
E. 155.0
Forecast for 2014 = (100+120+140+210)/4 = 570/4 = 142.5
AACSB: Analytic
Blooms: Analyze
regression.
(p. 53)
company uses three prior yearly sales values (i.e., year 2011 = 130, year 2012
= 110, and year 2013 =160), which of the following is the simple moving
average forecast for year 2014?
A. 100.5
B. 122.5
C. 133.3
D. 135.6
E. 139.3
Forecast for 2014 = (130+110+160)/3 = 400/4 = 133.3
AACSB: Analytic
Blooms: Analyze
regression.
65. A company wants to forecast demand using the weighted moving average. If
(p. 54)
the company uses two prior yearly sales values (i.e., year 2012 = 110 and year
2013 = 130), and we want to weight year 2012 at 10% and year 2013 at 90%,
which of the following is the weighted moving average forecast for year 2014?
A. 120
B. 128
C. 133
D. 138
E. 142
Forecast for 2014 = (110x0.1) + (130x0.9) = 11 + 117 = 128
AACSB: Analytic
Blooms: Analyze
regression.
(p. 54)
the company uses three prior yearly sales values (i.e., year 2011 = 160, year
2012 = 140 and year 2013 = 170), and we want to weight year 2011 at 30%,
year 2012 at 30% and year 2013 at 40%, which of the following is the weighted
moving average forecast for year 2014?
A. 170
B. 168
C. 158
D. 152
E. 146
Forecast for 2014 = (160x0.3) + (140x0.3) + (170x0.4) = 158
AACSB: Analytic
Blooms: Analyze
regression.
67. The exponential smoothing method requires which of the following data to
(p. 56)
forecast the future?
A. The most recent forecast
B. Precise actual demand for the past several years
C. The value of the smoothing constant delta
D. Overall industry demand data
E. Tracking values
In the exponential smoothing method, only three pieces of data are needed to
forecast the future: the most recent forecast, the actual demand that occurred
for that forecast period, and a smoothing constant alpha.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
68. Given a prior forecast demand value of 230, a related actual demand value of
(p. 56)
250, and a smoothing constant alpha of 0.1, what is the exponential smoothing
forecast value for the following period?
A. 230
B. 232
C. 238
D. 248
E. 250
Forecast = 230 + 0.1 x (250-230) = 232
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
regression.
69. If a firm produced a standard item with relatively stable demand, the smoothing
(p. 56)
constant alpha (reaction rate to differences) used in an exponential smoothing
forecasting model would tend to be in which of the following ranges?
A. 5 % to 10 %
B. 20 % to 50 %
C. 20 % to 80 %
D. 60 % to 120 %
E. 90 % to 100 %
If a firm produced a standard item with relatively stable demand, the reaction
rate to differences between actual and forecast demand would tend to be
small, perhaps just 5 or 10 percentage points.
AACSB: Analytic
Blooms: Understand
regression.
70. If a firm produced a product that was experiencing growth in demand, the
(p. 56)
smoothing constant alpha (reaction rate to differences) used in an exponential
smoothing forecasting model would tend to be which of the following?
A. Close to zero
B. A very low percentage, less than 10%
C. The more rapid the growth, the higher the percentage
D. The more rapid the growth, the lower the percentage
E. 50 % or more
If a firm were experiencing growth, it would be desirable to have a higher
reaction rate, perhaps 15 to 30 percentage points, to give greater importance to
recent growth experience. The more rapid the growth, the higher the reaction
rate should be.
AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
regression.
71. Given a prior forecast demand value of 1,100, a related actual demand value of
(p. 56)
1,000, and a smoothing constant alpha of 0.3, what is the exponential
smoothing forecast value?
A. 1,000
B. 1,030
C. 1,070
D. 1,130
E. 970
Forecast = 1,100 + 0.3 x (1,100-1,000) = 1,030
AACSB: Analytic
Blooms: Analyze
regression.
72. A company wants to generate a forecast for unit demand for year 2014 using
(p. 56)
exponential smoothing. The actual demand in year 2013 was 120. The forecast
demand in year 2013 was 110. Using this data and a smoothing constant alpha
of 0.1, which of the following is the resulting year 2014 forecast value?
A. 100
B. 110
C. 111
D. 114
E. 120
Forecast = 110 + 0.1 x (120-110) = 111
AACSB: Analytic
Blooms: Analyze
regression.
(p. 56)
product for year 2014 using exponential smoothing. The actual demand in year
2013 was 750. The forecast demand in year 2013 was 960. Using this data and
a smoothing constant alpha of 0.3, which of the following is the resulting year
2014 forecast value?
A. 766
B. 813
C. 897
D. 1,023
E. 1,120
Forecast = 960 + 0.3 x (960-750) = 897
AACSB: Analytic
Blooms: Analyze
regression.
74. Which of the following is a possible source of bias error in forecasting?
(p. 70)
A. Failing to include the right variables
B. Using the wrong forecasting method
C. Employing less sophisticated analysts than necessary
D. Using incorrect data
E. Using standard deviation rather than MAD
Bias errors occur when a consistent mistake is made. Sources of bias include
the failure to include the right variables; the use of the wrong relationships
among variables; employing of the wrong trend line; a mistaken shift in the
seasonal demand from where it normally occurs; and the existence of some
undetected secular trend.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
75. Which of the following are used to describe the degree of error?
(p. 70)
A. Weighted moving average
B. Regression
C. Moving average
D. Forecast as a percent of actual
E. Mean absolute deviation
Several common terms used to describe the degree of error are standard error,
mean squared error (or variance), and mean absolute deviation.
AACSB: Analytic
Blooms: Understand
76. A company has actual unit demand for three consecutive years of 124, 126,
(p. 70)
and 135. The respective forecasts for the same three years are 120, 120, and
130. Which of the following is the resulting MAD value that can be computed
from this data?
A. 1
B. 3
C. 5
D. 15
E. 123
MAD = ABS((124-120)+(126-120)+(135-130))/3 = 15/3 =5
AACSB: Analytic
Blooms: Analyze
77. A company has actual unit demand for four consecutive years of 100, 105, 135,
(p. 70)
and 150. The respective forecasts were 120 for all four years. Which of the
following is the resulting MAD value that can be computed from this data?
A. 2.5
B. 10
C. 20
D. 22.5
E. 30
MAD = ABS((100-120)+(105-120)+(135-120)+(150-120))/4 = 80/4 =20
AACSB: Analytic
Blooms: Analyze
78. If you were selecting from a variety of forecasting models based on MAD,
(p. 71)
which of the following MAD values from the same data would reflect the most
accurate model?
A. 0.2
B. 0.8
C. 1.0
D. 10.0
E. 100.0
Mean absolute percent error (MAPE) gauges the error relative to the average
demand. For example, if the MAD is 10 units and average demand is 20 units,
the error is large and significant, but relatively insignificant on an average
demand of 1,000 units. Since the same data is being used in the question,
MAPE would be least when MAD was smallest. Therefore A is the correct
answer.
AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
(p. 71)
mean absolute deviation is exactly 35. Which of the following is the company's
tracking signal?
A. Cannot be calculated based on this information
B. About 14.3
C. More than 35
D. Exactly 35
E. About 0.07
The tracking signal is RSFE/MAD = 500/35 = 14.29.
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
80. A company has a MAD of 10. Its wants to have a 99.7 percent control limits on
(p. 71)
its forecasting system. It's most recent tracking signal value is 3.1. What can
the company conclude from this information?
E. It is using an inappropriate forecasting methodology
Tracking Signal = RSFE/MAD hence, 3.1 = RSFE/10 or RSFE =3.1 x 10 = 31.
MAD = 10, SD = 1.25 x MAD = 12.5. Since 99.7 percent corresponds to 3
standard deviations from the mean, RSFE would have to be higher than 3 x
12.5 or 37.5 for the forecasting model to be out of control.
AACSB: Analytic
Blooms: Create
Difficulty: 3 Hard
81. You are hired as a consultant to advise a small firm on forecasting
(p. 71)
methodology. Based on your research you find the company has a MAD of 3.
Its wants to have a 99.7 percent control limits on its forecasting system. It's
most recent tracking signal value is 15. What should be your report to the
company?
E. The company is using an inappropriate forecasting methodology
Tracking Signal = RSFE/MAD hence, 15 = RSFE/3 or RSFE =15 x 3 = 45.
MAD = 3, SD = 1.25 x MAD = 3.75. Since 99.7 percent corresponds to 3
standard deviations from the mean, (3 x 3.75 = 11.25). Since RSFE is 45, the
forecasting model is out of control.
AACSB: Analytic
Blooms: Create
Difficulty: 3 Hard
82. Which of the following is the portion of observations you would expect to see
(p. 70)
lying within a plus or minus 3 MAD range?
A. 57.05 percent
B. 88.95 percent
C. 98.36 percent
D. 99.85 percent
E. 100 percent
3 MAD x 0.8 = 2.4 Standard Deviations. From Appendix E, 2.4 standard
deviations includes = 0.4918 of the area x 2 = 0.9836 or 98.36%
AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
83. Which of the following is the portion of observations you would expect to see
(p. 70)
lying within a plus or minus 2 MAD range?
A. 57.04
B. 89.04
C. 98.33
D. 99.86
E. 100.00
2 MAD x 0.8 = 1.6 Standard Deviations. From Appendix E, 1.6 standard
deviations includes = 0.4452 of the area x 2 = 0.8904 or 89.04%
AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
84. If the intercept value of a linear regression model is 40, the slope value is 40,
(p. 59)
and the value of X is 40, which of the following is the resulting forecast value
using this model?
A. 120
B. 1,600
C. 1,640
D. 2,200
E. 64,000
The linear regression line is of the form Y = a + bX, where Y is the value of the
dependent variable that we are solving for, a is the Y intercept, b is the slope,
and X is the independent variable. Hence, Y = 40 + 40 x 40 = 1,640.
AACSB: Analytic
Blooms: Analyze
regression.
85. A company hires you to develop a linear regression forecasting model. Based
(p. 59)
on the company's historical sales information, you determine the intercept
value of the model to be 1,200. You also find the slope value is minus 50. If
after developing the model you are given a value of X = 10, which of the
following is the resulting forecast value using this model?
A. - 1,800
B. 700
C. 1,230
D. 1,150
E. 12,000
The linear regression line is of the form Y = a + bX, where Y is the value of the
dependent variable that we are solving for, a is the Y intercept, b is the slope,
and X is the independent variable. Hence, Y = 1,200 + (-50) x 10 = 700.
AACSB: Analytic
Blooms: Analyze
regression.
86. Heavy sales of umbrellas during a rain storm is an example of which of the
(p. 72)
following?
A. A trend
B. A causal relationship
C. A statistical correlation
D. A coincidence
E. A fad
We can expect that an extended period of rain will increase sales of umbrellas
and raincoats. The rain causes the sale of rain gear. This is a causal
relationship, where one occurrence causes another.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
regression.
87. You are using an exponential smoothing model for forecasting. The running
(p. 71)
sum of the forecast error statistics (RSFE) are calculated each time a forecast
is generated. You find the last RSFE to be 34. Originally the forecasting model
used was selected because it's relatively low MAD of 0.4. To determine when it
is time to re-evaluate the usefulness of the exponential smoothing model you
compute tracking signals. Which of the following is the resulting tracking
signal?
A. 85
B. 60
C. 13.6
D. 12.9
E. 8
Tracking Signal = RSFE/MAD = 34/0.4 = 85.
AACSB: Analytic
Blooms: Analyze
Fill in the Blank Questions

88. Name the four basic types of forecasting.
(p. 50)
1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
(1.) qualitative; (2.) time series analysis; (3.) causal relationships; (4.)
simulation
Forecasting can be classified into four basic types: qualitative, time series
analysis, causal relationships, and simulation.
AACSB: Analytic
Blooms: Remember
(p. 71)
mean absolute deviation is exactly 25. What is the company's tracking signal?
_________________________________
16
Tracking Signal = RSFE/MAD = 400/25 = 16.
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
90. A company has calculated its running sum of forecast errors to be 1,000 and its
(p. 71)
tracking signal is 50. What is the company's mean absolute deviation?
_________________________________
20
Tracking Signal = RSFE/MAD. Hence, 50 = 1,000/MAD = 50 x MAD = 1,000.
MAD = 20
AACSB: Analytic
Blooms: Analyze
Difficulty: 1 Easy
(p. 53)
company uses three prior yearly sales values (i.e., year 2011 = 185, year 2012
= 215, and year 2013 =230), what is the simple moving average forecast for
year 2014? __________________________________
210
Forecast for 2014 = (185+215+230)/3 = 630/3 = 210.
AACSB: Analytic
Blooms: Analyze
regression.
(p. 54)
the company uses two prior yearly sales values (i.e., year 2012 = 11,000 and
year 2013 = 13,000), and we want to weight year 2012 at 35% and year 2013
at 65%, what is the weighted moving average forecast for Year 2014?
__________________________________________
12,300
Forecast for 2014 = (11,000 x 0.35) + (13,000 x 0.65) = 3,850 + 8,450 = 12,300
AACSB: Analytic
Blooms: Analyze
regression.
(p. 55-
product for Year 2014 using exponential smoothing. Actual demand in year
56)
2013 was 950 but the forecast for that year 1,060. Using this data and a
smoothing constant alpha of 0.5, which of the following is the resulting year
2014 forecast value? ________________________________________
1,005
Forecast for 2014 = 1,060 + 0.5 x (950-1,060) = 1,005
AACSB: Analytic
Blooms: Analyze
regression.
94. A company has had actual unit demand for four consecutive years of 100, 110,
(p. 56)
125, and 150. The respective forecasts using exponential smoothing were 120
for each of those four years. What value of alpha, the smoothing constant, was
the firm using? ____________________________________
0 (zero)
If the forecast deviates from the actual but the forecast for the next year does
not change then the value of alpha must be zero.
AACSB: Analytic
Blooms: Analyze
regression.
95. What are the five steps of CPFR (collaborative planning, forecasting and
(p. 76-
replenishment?)
78)
1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
5. ______________________________
(1.) Create a front-end partnership agreement; (2.) Joint business planning; (3.)
Development of demand forecasts; (4.) Sharing forecasts; (5.) Inventory
replenishment
CPFR uses a cyclic and iterative approach to derive consensus supply chain
forecasts. It consists of the following five steps:
Step 1. Creation of a front-end partnership agreement.

Step 2. Joint business planning.
Step 3. Development of demand forecasts.
Step 4. Sharing forecasts.
Step 5. Inventory replenishment.
AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Topic: Web-Based Forecasting: Collaborative Planning, Forecasting, and Replenishment
96. When analyzing time series data, if demand data contains both seasonal and
(p. 63)
trend effects at the same time, what are the two ways that they can relate to
each other discussed in the text?
1) ___________________________
2) ___________________________
1) additive and 2) multiplicative
When demand contains both seasonal and trend effects at the same time, the
question is how they relate to each other. In this (text), we examine two types
of seasonal variation: additive and multiplicative.
AACSB: Analytic
Blooms: Remember
97. What do we call forecasts that are for very high-level demand analysis?
(p. 48)
_______________________________________
Strategic Forecasts
Some forecasts are for very high-level demand analysis. What do we expect
the demand to be for a group of products over the next year, for example?
Some forecasts are used to help set the strategy of how, in an aggregate
sense, we will meet demand. We call these strategic forecasts.
AACSB: Analytic
Blooms: Remember
98. What do we call forecasts needed for how a firm operates on a day-to-day
(p. 48)
basis? _______________________________________
Tactical Forecasts
Forecasts are needed for how a firm operates processes on a day-to-day
basis. For example, when should the inventory for an item be replenished, or
how much production should we schedule for an item next week? These are
tactical forecasts.
AACSB: Analytic
Blooms: Remember
Essay Questions
99. What does the text mean when it states that rather than to search for the
(p. 49-
perfect forecast one should learn to live with inaccurate forecasts?
50)
The text makes this statement in the context of "perfect forecasts are virtually
impossible." And, further, analysts should not go to unreasonable lengths to
improve the precision of a forecast. Rather, the analyst should look at several
methodologies for forecasting the same phenomena and try to cull out the
"commonsense" view from them. It is far more important to continually review
forecasts and learn to live with inaccurate forecasts than it is to try to pin down
a forecast with too much precision.
Feedback: See discussion in answer, above.
AACSB: Analytic
Blooms: Create
100. Describe the collaborative planning, forecasting and replenishment (CPFR)
(p. 76-
technique.
78)
CPFR is described in the text. It is a sharing of information between trading
partners across multiple levels in a supply chain which allows the overall supply
chain to operate with lower levels of inventory and increased responsiveness.
In the words of the textbook, CPFR is a Web-based tool used to coordinate
demand forecasting, production and purchase planning, and inventory
replenishment between supply chain trading partners. CPFR is being used as a

means of integrating all members of an supply chain, including manufacturers,
distributors, and retailers.
Feedback: See answer, above.
AACSB: Analytic
Blooms: Remember
Topic: Web-Based Forecasting: Collaborative Planning, Forecasting, and Replenishment
Operations And Supply Chain Management The Core 3rd Edition Jacobs Test Bank
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101. Distinguish between strategic and tactical forecasts.

(p. 48)
Strategic and tactical forecasts are described in the chapter introduction. A
successful response to this question will contain some of the following
explanation.
Strategic forecasts are for very high-level demand analysis. What do we expect
the demand to be for a group of products over the next year, for example?
These forecasts are used to help set the strategy of how, in an aggregate
sense, we will meet demand.
Tactical forecasts are also needed for how a firm operates processes on a day-
to-day basis. For example, to answer questions like when should the inventory
for an item be replenished, or how much production should we schedule for an
item next week? These tactical forecasts' goal is to estimate demand in the
relative short term, a few weeks or months. Tactical forecasts are important to
ensure that in the short term we are able to meet customer lead time
expectations and other criteria related to the availability of our products and
services. With this question, some student responses go too far and attempt to
distinguish forecasting methodologies that are "best" for one type of forecast or
the other. Typically, these responses are far from the mark.
Feedback: See answer, above.
AACSB: Analytic
Blooms: Remember
This is sample only, Download all chapters at: testbankreal.com

More news on internet:
Acoustics is the branch of physics that deals with the study of all mechanical
waves in gases, liquids, and solids including topics such as vibration, sound,
ultrasound and infrasound. A scientist who works in the field of acoustics is an
acoustician while someone working in the field of acoustics technology may be
called an acoustical engineer. The application of acoustics is present in almost all
aspects of modern society with the most obvious being the audio and noise control
industries.
Hearing is one of the most crucial means of survival in the animal world, and
speech is one of the most distinctive characteristics of human development and
culture. Accordingly, the science of acoustics spreads across many facets of human
society—music, medicine, architecture, industrial production, warfare and more.
Likewise, animal species such as songbirds and frogs use sound and hearing as a
key element of mating rituals or marking territories. Art, craft, science and
technology have provoked one another to advance the whole, as in many other
fields of knowledge. Robert Bruce Lindsay's 'Wheel of Acoustics' is a well
accepted overview of the various fields in acoustics.[1]
The word "acoustic" is derived from the Greek word ἀκουστικός (akoustikos),
meaning "of or for hearing, ready to hear"[2] and that from ἀκουστός (akoustos),
"heard, audible",[3] which in turn derives from the verb ἀκούω (akouo), "I
hear".[4]
The Latin synonym is "sonic", after which the term sonics used to be a synonym
for acoustics[5] and later a branch of acoustics.[6] Frequencies above and below
the audible range are called "ultrasonic" and "infrasonic", respectively.
Contents
1 History
1.1 Early research in acoustics
1.2 Age of Enlightenment and onward
2 Fundamental concepts of acoustics
2.1 Definition
2.2 Wave propagation: pressure levels
2.3 Wave propagation: frequency
2.4 Transduction in acoustics
3 Acoustician
3.1 Education
4 Subdisciplines
4.1 Archaeoacoustics
4.2 Aeroacoustics
4.3 Acoustic signal processing
4.4 Architectural acoustics
4.5 Bioacoustics
4.6 Electroacoustics
4.7 Environmental noise and soundscapes
4.8 Musical acoustics
4.9 Psychoacoustics
4.10 Speech
4.11 Ultrasonics
4.12 Underwater acoustics
4.13 Vibration and dynamics
5 Professional societies
6 Academic journals
7 See also
8 Notes and references
9 Further reading
10 External links
History
Early research in acoustics
The fundamental and the first 6 overtones of a vibrating string. The earliest records
of the study of this phenomenon are attributed to the philosopher Pythagoras in the
6th century BC.
In the 6th century BC, the ancient Greek philosopher Pythagoras wanted to know
why some combinations of musical sounds seemed more beautiful than others, and
he found answers in terms of numerical ratios representing the harmonic overtone
series on a string. He is reputed to have observed that when the lengths of vibrating
strings are expressible as ratios of integers (e.g. 2 to 3, 3 to 4), the tones produced
will be harmonious, and the smaller the integers the more harmonious the sounds.
If, for example, a string of a certain length would sound particularly harmonious
with a string of twice the length (other factors being equal). In modern parlance, if
a string sounds the note C when plucked, a string twice as long will sound a C an
octave lower. In one system of musical tuning, the tones in between are then given
by 16:9 for D, 8:5 for E, 3:2 for F, 4:3 for G, 6:5 for A, and 16:15 for B, in
ascending order.[7]
Aristotle (384–322 BC) understood that sound consisted of compressions and

rarefactions of air which "falls upon and strikes the air which is next to it...",[8] a
very good expression of the nature of wave motion.
In about 20 BC, the Roman architect and engineer Vitruvius wrote a treatise on the
acoustic properties of theaters including discussion of interference, echoes, and
reverberation—the beginnings of architectural acoustics.[9] In Book V of his De
architectura (The Ten Books of Architecture) Vitruvius describes sound as a wave
comparable to a water wave extended to three dimensions, which, when interrupted
by obstructions, would flow back and break up following waves. He described the
ascending seats in ancient theaters as designed to prevent this deterioration of
sound and also recommended bronze vessels of appropriate sizes be placed in
theaters to resonate with the fourth, fifth and so on, up to the double octave, in
order to resonate with the more desirable, harmonious notes.[10][11][12]
During the Islamic golden age, Abū Rayhān al-Bīrūnī (973-1048) is believed to
postulated that the speed of sound was much slower than the speed of
light.[13][14]
Principles of acoustics have been applied since ancient times : A Roman theatre in
the city of Amman.
The physical understanding of acoustical processes advanced rapidly during and
after the Scientific Revolution. Mainly Galileo Galilei (1564–1642) but also Marin
Mersenne (1588–1648), independently, discovered the complete laws of vibrating
strings (completing what Pythagoras and Pythagoreans had started 2000 years
earlier). Galileo wrote "Waves are produced by the vibrations of a sonorous body,
which spread through the air, bringing to the tympanum of the ear a stimulus which
the mind interprets as sound", a remarkable statement that points to the beginnings
of physiological and psychological acoustics. Experimental measurements of the
speed of sound in air were carried out successfully between 1630 and 1680 by a
number of investigators, prominently Mersenne. Meanwhile, Newton (1642–1727)
derived the relationship for wave velocity in solids, a cornerstone of physical
acoustics (Principia, 1687).
Age of Enlightenment and onward

The eighteenth century saw major advances in acoustics as mathematicians applied
the new techniques of calculus to elaborate theories of sound wave propagation. In
the nineteenth century the major figures of mathematical acoustics were Helmholtz
in Germany, who consolidated the field of physiological acoustics, and Lord
Rayleigh in England, who combined the previous knowledge with his own copious
contributions to the field in his monumental work The Theory of Sound (1877).
Also in the 19th century, Wheatstone, Ohm, and Henry developed the analogy
between electricity and acoustics.
The twentieth century saw a burgeoning of technological applications of the large

body of scientific knowledge that was by then in place. The first such application
was Sabine’s groundbreaking work in architectural acoustics, and many others
followed. Underwater acoustics was used for detecting submarines in the first
World War. Sound recording and the telephone played important roles in a global
transformation of society. Sound measurement and analysis reached new levels of
accuracy and sophistication through the use of electronics and computing. The
ultrasonic frequency range enabled wholly new kinds of application in medicine
and industry. New kinds of transducers (generators and receivers of acoustic
energy) were invented and put to use.
Fundamental concepts of acoustics

Jay Pritzker Pavilion
At Jay Pritzker Pavilion, a LARES system is combined with a zoned sound

reinforcement system, both suspended on an overhead steel trellis, to synthesize an
indoor acoustic environment outdoors.
Definition
Acoustics is defined by ANSI/ASA S1.1-2013 as "(a) Science of sound, including
its production, transmission, and effects, including biological and psychological
effects. (b) Those qualities of a room that, together, determine its character with
respect to auditory effects."
The study of acoustics revolves around the generation, propagation and reception
of mechanical waves and vibrations.
The fundamental acoustical process
The steps shown in the above diagram can be found in any acoustical event or
process. There are many kinds of cause, both natural and volitional. There are
many kinds of transduction process that convert energy from some other form into
sonic energy, producing a sound wave. There is one fundamental equation that
describes sound wave propagation, the acoustic wave equation, but the phenomena
that emerge from it are varied and often complex. The wave carries energy
throughout the propagating medium. Eventually this energy is transduced again
into other forms, in ways that again may be natural and/or volitionally contrived.
The final effect may be purely physical or it may reach far into the biological or
volitional domains. The five basic steps are found equally well whether we are
talking about an earthquake, a submarine using sonar to locate its foe, or a band
playing in a rock concert.
The central stage in the acoustical process is wave propagation. This falls within
the domain of physical acoustics. In fluids, sound propagates primarily as a
pressure wave. In solids, mechanical waves can take many forms including
longitudinal waves, transverse waves and surface waves.
Acoustics looks first at the pressure levels and frequencies in the sound wave and
how the wave interacts with the environment. This interaction can be described as
either a diffraction, interference or a reflection or a mix of the three. If several
media are present, a refraction can also occur. Transduction processes are also of
special importance to acoustics.
Wave propagation: pressure levels

Main article: Sound pressure
Spectrogram of a young girl saying "oh, no"

In fluids such as air and water, sound waves propagate as disturbances in the
ambient pressure level. While this disturbance is usually small, it is still noticeable
to the human ear. The smallest sound that a person can hear, known as the
threshold of hearing, is nine orders of magnitude smaller than the ambient
pressure. The loudness of these disturbances is related to the sound pressure level
(SPL) which is measured on a logarithmic scale in decibels.
Wave propagation: frequency

Physicists and acoustic engineers tend to discuss sound pressure levels in terms of
frequencies, partly because this is how our ears interpret sound. What we
experience as "higher pitched" or "lower pitched" sounds are pressure vibrations
having a higher or lower number of cycles per second. In a common technique of
acoustic measurement, acoustic signals are sampled in time, and then presented in
more meaningful forms such as octave bands or time frequency plots. Both of
these popular methods are used to analyze sound and better understand the acoustic
phenomenon.
The entire spectrum can be divided into three sections: audio, ultrasonic, and
infrasonic. The audio range falls between 20 Hz and 20,000 Hz. This range is
important because its frequencies can be detected by the human ear. This range has
a number of applications, including speech communication and music. The
ultrasonic range refers to the very high frequencies: 20,000 Hz and higher. This
range has shorter wavelengths which allow better resolution in imaging
technologies. Medical applications such as ultrasonography and elastography rely
on the ultrasonic frequency range. On the other end of the spectrum, the lowest
frequencies are known as the infrasonic range. These frequencies can be used to
study geological phenomena such as earthquakes.
Analytic instruments such as the spectrum analyzer facilitate visualization and

measurement of acoustic signals and their properties. The spectrogram produced
by such an instrument is a graphical display of the time varying pressure level and
frequency profiles which give a specific acoustic signal its defining character.
Transduction in acoustics
An inexpensive low fidelity 3.5 inch driver, typically found in small radios
A transducer is a device for converting one form of energy into another. In an
electroacoustic context, this means converting sound energy into electrical energy
(or vice versa). Electroacoustic transducers include loudspeakers, microphones,
hydrophones and sonar projectors. These devices convert a sound pressure wave to
or from an electric signal. The most widely used transduction principles are
electromagnetism, electrostatics and piezoelectricity.
The transducers in most common loudspeakers (e.g. woofers and tweeters), are
electromagnetic devices that generate waves using a suspended diaphragm driven
by an electromagnetic voice coil, sending off pressure waves. Electret microphones
and condenser microphones employ electrostatics—as the sound wave strikes the
microphone's diaphragm, it moves and induces a voltage change. The ultrasonic
systems used in medical ultrasonography employ piezoelectric transducers. These
are made from special ceramics in which mechanical vibrations and electrical
fields are interlinked through a property of the material itself.
Acoustician
An acoustician is an expert in the science of sound.[15]
Education
There are many types of acoustician, but they usually have a Bachelor's degree or
higher qualification. Some possess a degree in acoustics, while others enter the
discipline via studies in fields such as physics or engineering. Much work in
acoustics requires a good grounding in Mathematics and science. Many acoustic
scientists work in research and development. Some conduct basic research to
advance our knowledge of the perception (e.g. hearing, psychoacoustics or
neurophysiology) of speech, music and noise. Other acoustic scientists advance
understanding of how sound is affected as it moves through environments, e.g.
Underwater acoustics, Architectural acoustics or Structural acoustics. Others areas
of work are listed under subdisciplines below. Acoustic scientists work in
government, university and private industry laboratories. Many go on to work in
Acoustical Engineering. Some positions, such as Faculty (academic staff) require a
Doctor of Philosophy.
Subdisciplines
These subdisciplines are a slightly modified list from the PACS (Physics and
Astronomy Classification Scheme) coding used by the Acoustical Society of
America.[16]
Archaeoacoustics
Main article: Archaeoacoustics
The Divje Babe flute

Archaeoacoustics is the study of sound within archaeology. This typically involves
studying the acoustics of archaeological sites and artefacts.[17]
Aeroacoustics
Main article: Aeroacoustics
Aeroacoustics is the study of noise generated by air movement, for instance via
turbulence, and the movement of sound through the fluid air. This knowledge is
applied in acoustical engineering to study how to quieten aircraft. Aeroacoustics is
important to understanding how wind musical instruments work.[18]
Acoustic signal processing

See also: Audio signal processing
Acoustic signal processing is the electronic manipulation of acoustic signals.
Applications include: active noise control; design for hearing aids or cochlear
implants; echo cancellation; music information retrieval, and perceptual coding
(e.g. MP3 or Opus).[19]
Architectural acoustics
Main article: Architectural acoustics
Symphony Hall Boston where auditorium acoustics began

Architectural acoustics (also known as building acoustics) involves the scientific
understanding of how to achieve a good sound within a building.[20] It typically
involves the study of speech intelligibility, speech privacy, music quality, and
vibration reduction in the built environment.[21]
Bioacoustics
Main article: Bioacoustics
Bioacoustics is the scientific study of the hearing and calls of animal calls, as well
as how animals are affected by the acoustic and sounds of their habitat.[22]
Electroacoustics
See also: Audio Engineering and Sound reinforcement system
This subdiscipline is concerned with the recording, manipulation and reproduction
of audio using electronics.[23] This might include products such as mobile phones,
large scale public address systems or virtual reality systems in research
laboratories.
Environmental noise and soundscapes

Main article: Environmental noise
See also: Noise pollution and Noise control
Environmental acoustics is concerned with noise and vibration caused by
railways,[24] road traffic, aircraft, industrial equipment and recreational
activities.[25] The main aim of these studies is to reduce levels of environmental
noise and vibration. Research work now also has a focus on the positive use of
sound in urban environments: soundscapes and tranquility.[26]
Musical acoustics
Main article: Musical acoustics
The primary auditory cortex is one of the main areas associated with superior pitch
resolution.
Musical acoustics is the study of the physics of acoustic instruments; the audio
signal processing used in electronic music; the computer analysis of music and
composition, and the perception and cognitive neuroscience of music.[27]
Psychoacoustics
Main article: Psychoacoustics
Psychoacoustics explains how humans respond to sounds.[28]
Speech
Main article: Speech
Acousticians study the production, processing and perception of speech. Speech
recognition and Speech synthesis are two important areas of speech processing
using computers. The subject also overlaps with the disciplines of physics,
physiology, psychology, and linguistics.[29]
Ultrasonics
Main article: Ultrasound
Ultrasound image of a fetus in the womb, viewed at 12 weeks of pregnancy

(bidimensional-scan)
Ultrasonics deals with sounds at frequencies too high to be heard by humans.
Specialisms include medical ultrasonics (including medical ultrasonography),
sonochemistry, material characterisation and underwater acoustics (Sonar).[30]
Underwater acoustics
Main article: Underwater acoustics
Underwater acoustics is the scientific study of natural and man-made sounds
underwater. Applications include sonar to locate submarines, underwater
communication by whales, climate change monitoring by measuring sea
temperatures acoustically, sonic weapons,[31] and marine bioacoustics.[32]
Vibration and dynamics

Main article: Vibration
This is the study of how mechanical systems vibrate and interact with their
surroundings. Applications might include: ground vibrations from railways;
vibration isolation to reduce vibration in operating theatres; studying how vibration
can damage health (vibration white finger); vibration control to protect a building
from earthquakes, or measuring how structure-borne sound moves through
buildings.[33]
Professional societies
The Acoustical Society of America (ASA)
The European Acoustics Association (EAA)
Institute of Electrical and Electronics Engineers (IEEE)
Institute of Acoustics (IoA UK)
The Audio Engineering Society (AES)
American Society of Mechanical Engineers, Noise Control and Acoustics Division
(ASME-NCAD)
International Commission for Acoustics (ICA)
American Institute of Aeronautics and Astronautics, Aeroacoustics (AIAA)
International Computer Music Association (ICMA)
Academic journals
Main category: Acoustics journals
Acta Acustica united with Acustica
Applied Acoustics
Journal of the Acoustical Society of America (JASA)
Journal of the Acoustical Society of America, Express Letters (JASA-EL)
Journal of the Audio Engineering Society
Journal of Sound and Vibration (JSV)
Journal of Vibration and Acoustics American Society of Mechanical Engineers
Ultrasonics (journal)

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True / False Questions

1. Continual review and updating in light of new data is a forecasting technique

2. Cyclical influences on demand are often expressed graphically as a linear

function that is either upward or downward sloping.

3. Cyclical influences on demand may come from occurrences such as political

elections, war or economic conditions.

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analysis of past data.

one times the number of data points.

7. In a forecasting model using simple exponential smoothing the data pattern

should remain stationary.

9. In the simple exponential smoothing forecasting model you need at least 30

observations to set the smoothing constant alpha.

weighted moving average forecasting model.

average forecasting model.

simple moving average model.

indicative of the future than data from the distant past.

the old forecast plus the error of the old forecast.

16. In exponential smoothing, it is desirable to use a higher smoothing constant when

forecasting demand for a product experiencing high growth.

18. Simple exponential smoothing lags changes in demand.

be corrected somewhat with a trend adjustment.

forecasts of demand contain error.

model being used.

22. There are no differences in strategic and tactical forecasting. A forecast is a

included in a forecasting model.

absolute deviation to the standard deviation is 2 to 1, or 2 x MAD = 1 standard

26. RSFE in forecasting stands for "reliable safety function error."

27. In forecasting, RSFE stands for "running sum of forecast errors."

deviations divided by the MAD.

projections fall on or near a straight line.

30. Regression is a functional relationship between two or more correlated variables,

where one variable is used to predict another.

33. Multiple regression analysis uses several regression models to generate a

forecasting technique and is capable of applying it to widely diverse situations.

36. In causal relationship forecasting leading indicators are used to forecast

experts and therefore do not require much judgment.

38. Market research is a quantitative method of forecasting.

data into its components.

contain one or more components of demand variation: trend, seasonal, cyclical,

autocorrelation, and random.

41. It is difficult to identify the trend in time series data.

activity that happen on other than an annual cycle.

Multiple Choice Questions

component of demand variation?

B. Time series analysis

E. Force field analysis

components. Which of the following is not considered a component of demand?

A. Average demand for a period

components. Which of the following is considered a component of demand?

components. Which of the following is considered a component of demand?

A. Simple moving average

50. Which of the following forecasting methodologies is considered a time series

A. Simple moving average

C. Simple movement smoothing

D. Weighted moving average

52. Which of the following forecasting methodologies is considered a causal

B. Weighted moving average

primary component for forecasting?

B. Time series analysis

A. Time series analysis

B. Simple moving average

C. Weighted moving average

A. Four weeks or less