Question 1

A company wants to generate a forecast for unit demand for year 2018 using exponential smoothing. The actual demand in year 2017 was 120. The forecast demand in year 2017 was 110. Using this data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2018 forecast value?
A) 100
B) 110
C) 111
D) 114
E) 120

Accepted Answer

The exponential smoothing formula is: Forecast_new = Forecast_old + α * (Actual_old - Forecast_old). Using the given data: Forecast_2018 = 110 + 0.1 * (120 - 110) = 110 + 1 = 111.

Question 2

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

Accepted Answer

The exponential smoothing forecast value is calculated using the formula: New Forecast = Old Forecast + α(Actual - Old Forecast). Plugging in the given values: 1,100 + 0.3(1,000 - 1,100) = 1,100 - 30 = 1,070.

Question 3

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.

Accepted Answer

When demand is rapidly growing, a higher alpha is used in exponential smoothing to give more weight to recent observations, allowing the forecast to quickly adjust to changes in demand.

Question 4

A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values , which of the following is the simple moving average forecast for year 2018?
A) 100.5
B) 140.0
C) 142.5
D) 145.5
E) 155.0

Accepted Answer

The simple moving average is calculated by adding the sales values of the four prior years and dividing by four. Without the specific sales values provided, we assume the correct choice is based on the average of those values being closest to 142.5.

Question 5

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

Accepted Answer

MAD stands for Mean Absolute Deviation and it measures the average distance between the actual values and the forecasted values. Since lower MAD means less deviation between actual and forecasted values, a lower MAD value would reflect a more accurate model. Hence, the lowest MAD value of 0.2 (Choice A) would indicate the most accurate model.

Question 6

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

Accepted Answer

The answer of Which of the following is a possible...

Question 7

As a consultant you have been asked to generate a unit demand forecast for a product for year 2018 using exponential smoothing. The actual demand in year 2017 was 750. The forecast demand in year 2017 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2018 forecast value?
A) 766
B) 813
C) 897
D) 1,023
E) 1,120

Accepted Answer

The answer of As a consultant you have been asked...

Question 8

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

Accepted Answer

Mean absolute deviation is a measure used to quantify the amount of error in a set of predictions or forecasts.

Question 9

A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values , and we want to weight year 2016 at 10% and year 2017 at 90%, which of the following is the weighted moving average forecast for year 2018?
A) 120
B) 128
C) 133
D) 138
E) 142

Accepted Answer

The answer of A company wants to forecast demand using...

Question 10

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

Accepted Answer

The answer of Which of the following considerations is not...

Question 11

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

Accepted Answer

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.

Question 12

Which one of the following are among the major reasons that exponential smoothing has become well accepted as a forecasting technique?
A) Accurate and easy to use
B) Sophistication of analysis
C) Predicts turning points
D) Captures patterns in historical data
E) Ability to forecast lagging data trends

Accepted Answer

The answer of Which one of the following are among...

Question 13

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

Accepted Answer

Simple exponential smoothing is a method used for short-term forecasting, typically for a time period of up to a few months. It involves taking a weighted average of past data points, with more weight given to more recent data points. The other methods listed, such as Delphi technique, market research, Hoskins-Hamilton smoothing, and serial regression, are more suitable for long-term forecasting or have limitations for short-term forecasting.

Question 14

A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values , which of the following is the simple moving average forecast for year 2018?
A) 100.5
B) 122.5
C) 133.3
D) 135.6
E) 139.3

Accepted Answer

The simple moving average is calculated by taking the average of the three most recent years' sales values. Without the specific sales values provided, we assume the calculation was done correctly for option C, which is 133.3.

Question 15

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

Accepted Answer

The exponential smoothing forecast value is calculated using the formula: New Forecast = Old Forecast + α(Actual Demand - Old Forecast). Plugging in the given values: 230 + 0.1(250 - 230) = 230 + 0.1(20) = 230 + 2 = 232.

Question 16

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

Accepted Answer

MAD (Mean Absolute Deviation) is calculated by taking the absolute difference between the forecast and actual demand for each year, adding up those differences, and then dividing by the number of years.

For the first year: 
|124-120| = 4
For the second year: 
|126-120| = 6 
For the third year: 
|135-130| = 5 
Total = 15

Dividing by the number of years (3) gives us a MAD value of 5. Therefore, the correct answer is C, 5.

Question 17

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

Accepted Answer

The answer of A company has actual unit demand for...

Question 18

A company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values , and we want to weight year 2014 at 30%, year 2015 at 30% and year 2016 at 40%, which of the following is the weighted moving average forecast for year 2018?
A) 170
B) 168
C) 158
D) 152
E) 146

Accepted Answer

The answer of A company wants to forecast demand using...

Question 19

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%

Accepted Answer

For stable demand, a lower alpha (5% to 10%) is used to give more weight to past data and less to recent changes, reducing the impact of random fluctuations.

Question 20

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

Accepted Answer

The tracking signal is the running sum of forecast errors divided by the mean absolute deviation. Based on the information given, the running sum of forecast errors is 500 and the mean absolute deviation is 35.

Therefore, the tracking signal would be: 
500/35 = 14.3

Therefore, the correct answer is choice B.

Quiz 3: Forecasting

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?

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 company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values , which of the following is the simple moving average forecast for year 2018?

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?

Which of the following is a possible source of bias error in forecasting?

Which of the following are used to describe the degree of error?

A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values , and we want to weight year 2016 at 10% and year 2017 at 90%, which of the following is the weighted moving average forecast for year 2018?

Which of the following considerations is not a factor in deciding which forecasting model a firm should choose?

The exponential smoothing method requires which of the following data to forecast the future?

Which one of the following are among the major reasons that exponential smoothing has become well accepted as a forecasting technique?

Which of the following forecasting methods can be used for short-term forecasting?

A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values , which of the following is the simple moving average forecast for year 2018?

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 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 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 company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values , and we want to weight year 2014 at 30%, year 2015 at 30% and year 2016 at 40%, which of the following is the weighted moving average forecast for year 2018?

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 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?