Operations Management 11th Edition By Jay Heizer – Test Bank

 

 

To Purchase this Complete Test Bank with Answers Click the link Below

 

https://tbzuiqe.com/product/operations-management-11th-edition-by-jay-heizer-test-bank/

 

If face any problem or Further information contact us At tbzuiqe@gmail.com

 

 

Sample Questions

 

Operations Management, 11e (Heizer/Render)

Chapter 4  Forecasting

 

Section 1   What is Forecasting?

 

1) Forecasts may be influenced by a product’s position in its life cycle.

Answer:  TRUE

Diff: 1

Learning Outcome:  Describe major approaches to forecasting

 

2) Demand forecasts serve as inputs to financial, marketing, and personnel planning.

Answer:  TRUE

Diff: 2

Key Term:  Demand forecasts

Learning Outcome:  Describe major approaches to forecasting

 

3) What two numbers are contained in the daily report to the CEO of Walt Disney Parks & Resorts regarding the six Orlando parks?

1.    A) yesterday’s forecasted attendance and yesterday’s actual attendance

2.    B) yesterday’s actual attendance and today’s forecasted attendance

3.    C) yesterday’s forecasted attendance and today’s forecasted attendance

4.    D) yesterday’s actual attendance and last year’s actual attendance

5.    E) yesterday’s forecasted attendance and the year-to-date average daily forecast error

Answer:  A

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

 

4) As compared to long-range forecasts, short-range forecasts:

1.    A) are less accurate.

2.    B) deal with less comprehensive issues supporting management decisions.

3.    C) employ similar methodologies.

4.    D) all of the above

5.    E) none of the above

Answer:  B

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

 

5) One use of short-range forecasts is to determine:

1.    A) planning for new products.

2.    B) capital expenditures.

3.    C) research and development plans.

4.    D) facility location.

5.    E) job assignments.

Answer:  E

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

6) Forecasts are usually classified by time horizon into which three categories?

1.    A) short-range, medium-range, and long-range

2.    B) finance/accounting, marketing, and operations

3.    C) strategic, tactical, and operational

4.    D) exponential smoothing, regression, and time series

5.    E) departmental, organizational, and industrial

Answer:  A

Diff: 1

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

7) A forecast with a time horizon of about 3 months to 3 years is typically called a:

1.    A) long-range forecast.

2.    B) medium-range forecast.

3.    C) short-range forecast.

4.    D) weather forecast.

5.    E) strategic forecast.

Answer:  B

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

8) Forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize a:

1.    A) short-range time horizon.

2.    B) medium-range time horizon.

3.    C) long-range time horizon.

4.    D) naive method, because there is no data history.

5.    E) trend extrapolation.

Answer:  C

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

 

9) The three major types of forecasts used by organizations in planning future operations are:

1.    A) strategic, tactical, and operational.

2.    B) economic, technological, and demand.

3.    C) exponential smoothing, Delphi, and regression.

4.    D) causal, time-series, and seasonal.

5.    E) departmental, organizational, and territorial.

Answer:  B

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

10) Which of the following most requires long-range forecasting (as opposed to short-range or medium-range forecasting) for its planning purposes?

1.    A) job scheduling

2.    B) production levels

3.    C) cash budgeting

4.    D) capital expenditures

5.    E) purchasing

Answer:  D

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

11) Short-range forecasts tends to ________ longer-range forecasts.

1.    A) be less accurate than

2.    B) be more accurate than

3.    C) have about the same level of accuracy as

4.    D) employ the same methodologies as

5.    E) deal with more comprehensive issues than

Answer:  B

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

12) ________ forecasts are concerned with rates of technological progress, which can result in the birth of exciting new products, requiring new plants and equipment.

Answer:  Technological

Diff: 1

Key Term:  Technological forecasts

Learning Outcome:  Describe major approaches to forecasting

 

13) ________ forecasts address the business cycle by predicting inflation rates, money supplies, housing starts, and other planning indicators.

Answer:  Economic

Diff: 2

Key Term:  Economic forecasts

Learning Outcome:  Describe major approaches to forecasting

 

 

14) A skeptical manager asks what short-range forecasts can be used for. Give her three possible uses/purposes.

Answer:  Any three of: planning purchasing, job scheduling, workforce levels, job assignments, and production levels.

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

15) A skeptical manager asks what long-range forecasts can be used for. Give her three possible uses/purposes.

Answer:  Any three of: planning for new products, capital expenditures, facility location or expansion, and research and development.

Diff: 2

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

16) Describe the three forecasting time horizons and their use.

Answer:  Forecasting time horizons are: short range–generally less than three months, used for planning purchasing, job scheduling, workforce levels, job assignments, and production levels; medium range–usually from three months up to three years, used for sales planning, production planning and budgeting, cash budgeting, analysis of various operating plans; long range–usually three years or more, used for planning for new products, capital expenditures, facility location or expansion, and R&D.

Diff: 3

Objective:  LO1

Learning Outcome:  Describe major approaches to forecasting

 

17) List and briefly describe the three major types of forecasts that organizations use in planning future operations.

Answer:  The three types are economic, technological, and demand. Economic forecasts address the business cycle by predicting inflation rates, money supplies, housing starts, and other planning indicators. Technological forecasts are concerned with rates of technological progress, which can result in the birth of exciting new products, requiring new plants and equipment. Demand forecasts are projections of demand for a company’s products or services.

Diff: 3

Learning Outcome:  Describe major approaches to forecasting

 

Section 2   The Strategic Importance of Forecasting

 

1) What forecasting systems combine the intelligence of multiple supply chain partners?

1.    A) FORE

2.    B) MULTISUP

3.    C) CPFR

4.    D) SUPPLY

5.    E) MSCP

Answer:  C

Diff: 3

Learning Outcome:  Describe major approaches to forecasting

 

Section 3   Seven Steps in the Forecasting System

 

1) Forecasts of individual products tend to be more accurate than forecasts of product families.

Answer:  FALSE

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

2) Most forecasting techniques assume that there is some underlying stability in the system.

Answer:  TRUE

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

 

3) Which of the following is NOT a step in the forecasting process?

1.    A) Determine the use of the forecast.

2.    B) Eliminate any assumptions.

3.    C) Determine the time horizon of the forecast.

4.    D) Select the forecasting model.

5.    E) Validate and implement the results.

Answer:  B

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

 

4) Identify the seven steps involved in forecasting.

Answer:  1. Determine the use of the forecast.

2.    Select the items to be forecasted.

3.    Determine the time horizon of the forecast.

4.    Select the forecasting model(s).

5.    Gather the data needed to make the forecast.

6.    Make the forecast.

7.    Validate and implement the results.

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

 

5) What are the three realities of forecasting that companies face?

Answer:  First, outside factors that we cannot predict or control often impact the forecast. Second, most forecasting techniques assume that there is some underlying stability in the system. Finally, both product family and aggregated forecasts are more accurate than individual product forecasts.

Diff: 3

Learning Outcome:  Describe major approaches to forecasting

 

Section 4   Forecasting Approaches

 

1) The sales force composite forecasting method relies on salespersons’ estimates of expected sales.

Answer:  TRUE

Diff: 1

Key Term:  Sales force composite

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

 

2) A time-series model uses a series of past data points to make the forecast.

Answer:  TRUE

Diff: 2

Key Term:  Time series

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

3) The quarterly “make meeting” of Lexus dealers is an example of a sales force composite forecast.

Answer:  TRUE

Diff: 2

Key Term:  Sales force composite

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

 

4) The two general approaches to forecasting are:

1.    A) qualitative and quantitative.

2.    B) mathematical and statistical.

3.    C) judgmental and qualitative.

4.    D) historical and associative.

5.    E) judgmental and associative.

Answer:  A

Diff: 1

Learning Outcome:  Describe major approaches to forecasting

 

5) Which of the following uses three types of participants: decision makers, staff personnel, and respondents?

1.    A) jury of executive opinion

2.    B) sales force composite

3.    C) Delphi method

4.    D) associative models

5.    E) time series

Answer:  C

Diff: 2

Key Term:  Delphi method

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

 

 

6) The forecasting technique that pools the opinions of a group of experts or managers is known as:

1.    A) the expert judgment model.

2.    B) multiple regression.

3.    C) jury of executive opinion.

4.    D) market survey.

5.    E) management coefficients.

Answer:  C

Diff: 2

Key Term:  Jury of executive opinion

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

7) Which of the following is not a type of qualitative forecasting?

1.    A) jury of executive opinion

2.    B) sales force composite

3.    C) market survey

4.    D) Delphi method

5.    E) moving average

Answer:  E

Diff: 2

Key Term:  Qualitative forecasts

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

 

8) Which of the following techniques uses variables such as price and promotional expenditures, which are related to product demand, to predict demand?

1.    A) associative models

2.    B) exponential smoothing

3.    C) weighted moving average

4.    D) moving average

5.    E) trend projection

Answer:  A

Diff: 2

Objective:  LO6

Learning Outcome:  Describe major approaches to forecasting

 

9) ________ forecasts employ one or more mathematical models that rely on historical data and/or associative variables to forecast demand.

Answer:  Quantitative

Diff: 2

Key Term:  Quantitative forecasts

Learning Outcome:  Describe major approaches to forecasting

 

 

10) ________ is a forecasting technique based upon salespersons’ estimates of expected sales.

Answer:  Sales force composite

Diff: 2

Key Term:  Sales force composite

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

 

11) ________ forecasts use a series of past data points to make a forecast.

Answer:  Time-series

Diff: 2

Key Term:  Time series

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

12) What are the differences between quantitative and qualitative forecasting methods?

Answer:  Quantitative methods use mathematical models to analyze historical data. Qualitative methods incorporate such factors as the decision maker’s intuition, emotions, personal experiences, and value systems in determining the forecast.

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

13) Identify four quantitative forecasting methods.

Answer:  The list includes naive, moving averages, exponential smoothing, trend projection, and linear regression.

Diff: 2

Key Term:  Quantitative forecasts

Learning Outcome:  Describe major approaches to forecasting

 

14) What is a time-series forecasting model?

Answer:  A time-series forecasting model uses a series of past data points to make a forecast.

Diff: 1

Key Term:  Time series

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

15) What is the difference between an associative model and a time-series model?

Answer:  A time-series model uses only historical values of the quantity of interest to predict future values of that quantity. The associative model, on the other hand, incorporates the variables or factors that might influence the quantity being forecast.

Diff: 2

Key Term:  Time series

Learning Outcome:  Describe major approaches to forecasting

 

 

16) Name and discuss three qualitative forecasting methods.

Answer:  Qualitative forecasting methods include: jury of executive opinion, where high-level managers arrive at a group estimate of demand; sales force composite, where salespersons’ estimates are aggregated; Delphi method, which uses a group process that allows experts to make forecasts; and market survey, where consumers are queried about their future purchasing plans.

Diff: 2

Key Term:  Qualitative forecasts

Objective:  LO2

Learning Outcome:  Describe major approaches to forecasting

 

Section 5   Time-Series Forecasting

 

1) A naïve forecast for September sales of a product would be equal to the forecast for August.

Answer:  FALSE

Diff: 2

Key Term:  Naive approach

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

2) Cycles and random variations are both components of time series.

Answer:  TRUE

Diff: 1

Key Term:  Time series

Learning Outcome:  Describe major approaches to forecasting

3) A naïve forecast for September sales of a product would be equal to the sales in August.

Answer:  TRUE

Diff: 1

Key Term:  Naive approach

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

4) One advantage of exponential smoothing is the limited amount of record keeping involved.

Answer:  TRUE

Diff: 2

Key Term:  Exponential smoothing

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

 

5) The larger the number of periods in the simple moving average forecasting method, the greater the method’s responsiveness to changes in demand.

Answer:  FALSE

Diff: 2

Key Term:  Moving averages

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

6) Mean squared error and exponential smoothing are two measures of the overall error of a forecasting model.

Answer:  FALSE

Diff: 1

Objective:  LO4

Learning Outcome:  Describe major approaches to forecasting

 

7) In trend projection, the trend component is the slope of the regression equation.

Answer:  TRUE

Diff: 1

Key Term:  Trend projection

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

8) In trend projection, a negative regression slope is mathematically impossible.

Answer:  FALSE

Diff: 2

Key Term:  Trend projection

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

9) Seasonal indices adjust raw data for patterns that repeat at regular time intervals.

Answer:  TRUE

Diff: 2

Key Term:  Seasonal variations

AACSB:  Reflective thinking skills

Objective:  LO5

Learning Outcome:  Describe major approaches to forecasting

 

10) A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y per period.

Answer:  TRUE

Diff: 2

Key Term:  Trend projection

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

 

11) Demand for individual products can be driven by product life cycles.

Answer:  TRUE

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

 

12) Which of the following statements about time-series forecasting is true?

1.    A) It is always based on the assumption that future demand will be the same as past demand.

2.    B) It makes extensive use of the data collected in the qualitative approach.

3.    C) It is based on the assumption that the analysis of past demand helps predict future demand.

4.    D) Because it accounts for trends, cycles, and seasonal patterns, it is always more powerful than associative forecasting.

5.    E) All of the above are true.

Answer:  C

Diff: 2

Key Term:  Time series

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

13) Time-series data may exhibit which of the following behaviors?

1.    A) trend

2.    B) random variations

3.    C) seasonality

4.    D) cycles

5.    E) They may exhibit all of the above.

Answer:  E

Diff: 2

Key Term:  Time series

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

14) Gradual upward or downward movement of data over time is called:

1.    A) seasonality.

2.    B) a cycle.

3.    C) a trend.

4.    D) exponential variation.

5.    E) random variation.

Answer:  C

Diff: 2

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

 

15) Which of the following is not present in a time series?

1.    A) seasonality

2.    B) operational variations

3.    C) trend

4.    D) cycles

5.    E) random variations

Answer:  B

Diff: 2

Key Term:  Time series

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

16) The fundamental difference between cycles and seasonality is the:

1.    A) duration of the repeating patterns.

2.    B) magnitude of the variation.

3.    C) ability to attribute the pattern to a cause.

4.    D) all of the above

5.    E) none of the above

Answer:  A

Diff: 2

Learning Outcome:  Describe major approaches to forecasting

 

17) In time series, which of the following cannot be predicted?

1.    A) large increases in demand

2.    B) cycles

3.    C) seasonal fluctuations

4.    D) random variations

5.    E) large decreases in demand

Answer:  D

Diff: 2

Key Term:  Time series

Learning Outcome:  Describe major approaches to forecasting

 

18) What is the forecast for May using a four-month moving average?

 

Nov.	Dec.	Jan.	Feb.	Mar.	April
39	36	40	42	48	46

 

1.    A) 38

2.    B) 42

3.    C) 43

4.    D) 44

5.    E) 47

Answer:  D

Diff: 2

Key Term:  Moving averages

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

19) Which time-series model below assumes that demand in the next period will be equal to the most recent period’s demand?

1.    A) naïve approach

2.    B) moving average approach

3.    C) weighted moving average approach

4.    D) exponential smoothing approach

5.    E) trend projection

Answer:  A

Diff: 1

Key Term:  Naive approach

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

20) John’s House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous month’s demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 1000 pancakes in May, 2200 pancakes in June, and 3000 pancakes in July, what should be the forecast for August?

1.    A) 2400

2.    B) 2511

3.    C) 2067

4.    D) 3767

5.    E) 1622

Answer:  B

Diff: 2

Key Term:  Moving averages

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

21) A six-month moving average forecast is generally better than a three-month moving average forecast if demand:

1.    A) is rather stable.

2.    B) has been changing due to recent promotional efforts.

3.    C) follows a downward trend.

4.    D) exceeds one million units per year.

5.    E) follows an upward trend.

Answer:  A

Diff: 2

Key Term:  Moving averages

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

22) Increasing the number of periods in a moving average will accomplish greater smoothing, but at the expense of:

1.    A) manager understanding.

2.    B) accuracy.

3.    C) stability.

4.    D) sensitivity to real changes in the data.

5.    E) All of the above are diminished when the number of periods increases.

Answer:  D

Diff: 2

Key Term:  Moving averages

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

23) Which of the following statements comparing exponential smoothing to the weighted moving average technique is TRUE?

1.    A) Exponential smoothing is more easily used in combination with the Delphi

2.    B) More emphasis can be placed on recent values using the weighted moving average.

3.    C) Exponential smoothing is considerably more difficult to implement on a computer.

4.    D) Exponential smoothing typically requires less record keeping of past data.

5.    E) Exponential smoothing allows one to develop forecasts for multiple periods, whereas the weighted moving average technique does not.

Answer:  D

Diff: 2

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

24) Which time-series model uses BOTH past forecasts and past demand data to generate a new forecast?

1.    A) naïve

2.    B) moving average

3.    C) weighted moving average

4.    D) exponential smoothing

5.    E) trend projection

Answer:  D

Diff: 2

Key Term:  Exponential smoothing

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

25) Which of the following is NOT a characteristic of exponential smoothing?

1.    A) smoothes random variations in the data

2.    B) uses an easily altered weighting scheme

3.    C) weights each historical value equally

4.    D) has minimal data storage requirements

5.    E) uses the previous period’s forecast

Answer:  C

Diff: 2

Key Term:  Exponential smoothing

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

26) Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

1.    A) 0

2.    B) 1 divided by the number of periods

3.    C) 0.5

4.    D) 1.0

5.    E) cannot be determined

Answer:  D

Diff: 3

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

27) Given an actual demand this period of 103, a forecast value for this period of 99, and an alpha of .4, what is the exponential smoothing forecast for next period?

94.  A) 94.6

95.  B) 97.4

96.  C) 100.6

97.  D) 101.6

98.  E) 103.0

Answer:  C

Diff: 2

Key Term:  Exponential smoothing

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

28) A forecast based on the previous forecast plus a percentage of the forecast error is a(n):

1.    A) qualitative forecast.

2.    B) naive forecast.

3.    C) moving average forecast.

4.    D) weighted moving average forecast.

5.    E) exponential smoothing forecast.

Answer:  E

Diff: 2

Key Term:  Exponential smoothing

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

29) Given an actual demand this period of 61, a forecast for this period of 58, and an alpha of 0.3, what would the forecast for the next period be using exponential smoothing?

45.  A) 45.5

46.  B) 57.1

47.  C) 58.9

48.  D) 61.0

49.  E) 65.5

Answer:  C

Diff: 2

Key Term:  Exponential smoothing

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

30) Which of the following values of alpha would cause exponential smoothing to respond the SLOWEST to forecast errors?

1.    A) 0.10

2.    B) 0.2246

3.    C) 0.50

4.    D) 0.90

5.    E) cannot be determined

Answer:  A

Diff: 2

Key Term:  Exponential smoothing

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

31) A forecasting method has produced the following over the past five months. What is the mean absolute deviation?

 

Actual	Forecast	Error	|Error|
10	11	-1	1
8	10	-2	2
10	8	2	2
6	6	0	0
9	8	1	1

 

1.    A) -0.2

2.    B) -1.0

3.    C) 0.0

4.    D) 1.2

5.    E) 8.6

Answer:  D

Diff: 2

Key Term:  Mean absolute deviation (MAD)

AACSB:  Analytic skills

Objective:  LO4

Learning Outcome:  Describe major approaches to forecasting

 

32) The primary purpose of the mean absolute deviation (MAD) in forecasting is to:

1.    A) estimate the trend line.

2.    B) eliminate forecast errors.

3.    C) measure forecast accuracy.

4.    D) seasonally adjust the forecast.

5.    E) remove random variations.

Answer:  C

Diff: 2

Key Term:  Mean absolute deviation (MAD)

Objective:  LO4

Learning Outcome:  Describe major approaches to forecasting

33) Given forecast errors of -1, 4, 8, and -3, what is the mean absolute deviation?

1.    A) 2

2.    B) 3

3.    C) 4

4.    D) 8

5.    E) 16

Answer:  C

Diff: 2

Key Term:  Mean absolute deviation (MAD)

AACSB:  Analytic skills

Objective:  LO4

Learning Outcome:  Describe major approaches to forecasting

 

34) Suppose that the last four months of sales were 8, 10, 15, and 9 units, respectively. Suppose further that the last four forecasts were 5, 6, 11, and 12 units, respectively. What is the Mean Absolute Deviation (MAD) of these forecasts?

1.    A) 2

2.    B) -10

3.    C) 3.5

4.    D) 9

5.    E) 10.5

Answer:  C

Diff: 2

Key Term:  Mean absolute deviation (MAD)

AACSB:  Analytic skills

Objective:  LO4

Learning Outcome:  Describe major approaches to forecasting

 

35) A time-series trend equation is 25.3 + 2.1x. What is your forecast for period 7?

23.  A) 23.2

24.  B) 25.3

25.  C) 27.4

26.  D) 40.0

27.  E) 179.2

Answer:  D

Diff: 2

Key Term:  Trend projection

AACSB:  Analytic skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

36) For a given product demand, the time-series trend equation is 53 – 4x. The negative sign on the slope of the equation:

1.    A) is a mathematical impossibility.

2.    B) is an indication that the forecast is biased, with forecast values lower than actual values.

3.    C) is an indication that product demand is declining.

4.    D) implies that the coefficient of determination will also be negative.

5.    E) implies that the cumulative error will be negative.

Answer:  C

Diff: 2

Key Term:  Trend projection

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

37) Yamaha manufactures which set of products with complementary demands to address seasonal variations?

1.    A) golf clubs and skis

2.    B) swimming suits and winter jackets

3.    C) jet skis and snowmobiles

4.    D) pianos and guitars

5.    E) ice skates and water skis

Answer:  C

Diff: 2

Key Term:  Seasonal variations

Objective:  LO5

Learning Outcome:  Describe major approaches to forecasting

 

38) Which of the following is TRUE regarding the two smoothing constants of the Forecast Including Trend (FIT) model?

1.    A) One constant is positive, while the other is negative.

2.    B) They are called MAD and cumulative error.

3.    C) Alpha is always smaller than beta.

4.    D) One constant smoothes the regression intercept, whereas the other smoothes the regression slope.

5.    E) Their values are determined independently.

Answer:  E

Diff: 2

Key Term:  Exponential smoothing

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

39) Demand for a certain product is forecast to be 800 units per month, averaged over all 12 months of the year. The product follows a seasonal pattern, for which the January monthly index is 1.25. What is the seasonally-adjusted sales forecast for January?

1.    A) 640 units

2.    B) 798.75 units

3.    C) 801.25 units

4.    D) 1000 units

5.    E) 83.33 units

Answer:  D

Diff: 2

Key Term:  Seasonal variations

AACSB:  Analytic skills

Objective:  LO5

Learning Outcome:  Describe major approaches to forecasting

 

40) A seasonal index for a monthly series is about to be calculated on the basis of three years’ accumulation of data. The three previous July values were 110, 150, and 130. The average demand over all months during the three-year time period was 190 . What is the approximate seasonal index for July?

1.    A) 0.487

2.    B) 0.684

3.    C) 1.462

4.    D) 2.053

5.    E) cannot be calculated with the information given

Answer:  B

Diff: 2

Key Term:  Seasonal variations

AACSB:  Analytic skills

Objective:  LO5

Learning Outcome:  Describe major approaches to forecasting

 

41) Suppose that the demand in period 1 was 7 units and the demand in period 2 was 9 units. Assume that the forecast for period 1 was for 5 units. If the firm uses exponential smoothing with an alpha value of .20, what should be the forecast for period 3? (Round answers to two decimal places.)

9.    A) 9.00

10.  B) 3.72

11.  C) 9.48

12.  D) 5.00

13.  E) 6.12

Answer:  E

Diff: 2

Key Term:  Exponential smoothing

AACSB:  Analytic skills

Objective:  LO5

Learning Outcome:  Describe major approaches to forecasting

 

42) ________ expresses the error as a percent of the actual values.

1.    A) MAD

2.    B) MSE

3.    C) MAPE

4.    D) FIT

5.    E) The smoothing constant

Answer:  C

Diff: 2

Key Term:  Mean absolute percent error (MAPE)

Objective:  LO4

Learning Outcome:  Describe major approaches to forecasting

 

43) If Brandon Edward were working to develop a forecast using a moving averages approach, but he noticed a detectable trend in the historical data, he should:

1.    A) use weights to place more emphasis on recent data.

2.    B) use weights to minimize the importance of the trend.

3.    C) change to an associative multiple regression approach.

4.    D) use a simple moving average.

5.    E) change to a qualitative approach.

Answer:  A

Diff: 2

Key Term:  Moving averages

AACSB:  Reflective thinking skills

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting

 

44) A(n) ________ forecast uses an average of the most recent periods of data to forecast the next period.

Answer:                moving average (or simple moving average)

Diff: 2

Key Term:  Moving averages

Objective:  LO3

Learning Outcome:  Describe major approaches to forecasting