Question 1

Draw a curve that represents four out of the five demand patterns for time series as discussed in this chapter. Clearly label both dependent and independent axis and the salient features of your graph that demonstrate your chosen patterns. Select a product or service and discuss what influences might cause it to exhibit each of these patterns.

Accepted Answer

Answers will vary depending on which patterns among horizontal, trend, seasonal, cyclical, and random patterns have been chosen.

Question 2

A systematic increase or decrease in the mean of the series over time is a(n) ________.

Accepted Answer

trend

Question 3

A regression equation with a coefficient of determination near one would be most likely to occur when the data demonstrated a:

Accepted Answer

A coefficient of determination near one indicates a strong linear correlation between the dependent and independent variables. This is most likely to happen when there is a clear trend in the data, as opposed to a seasonal, cyclical or random pattern.

Question 4

The repeated observations of demand for a product or service in their order of occurrence form a pattern known as a time series.

Accepted Answer

This statement is true. Time series analysis requires the observations to be recorded in sequence as they occur over time.

Question 5

In the winter, Handyman Negri repaired snowblowers and in the summer he earned extra money by repairing lawnmowers, a classic example of:

Accepted Answer

Complementary products refer to products or services that are typically used together or in conjunction with each other. Snowblowers and lawnmowers are complementary products because they are both used for outdoor lawn maintenance but during different seasons. Therefore, Handyman Negri's repair services for both snowblowers and lawnmowers help him earn extra money by catering to customers' needs year-round.

Question 6

A weary traveler shows up at a hotel desk at midnight without a reservation. The desk clerk informs him that there is a room available, but sadly it is marked up 80% higher than the usual price. This is an example of:

Accepted Answer

This is an example of yield management, where prices are adjusted based on demand and availability to maximize revenue. The hotel is likely to have a higher demand for rooms at midnight when someone shows up without a reservation, and therefore can charge a higher price.

Question 7

A weary traveler shows up at a hotel desk at midnight without a reservation. The desk clerk informs him that there is a room available, but sadly it is marked up 80% higher than the usual price. This is an example of promotional pricing.

Accepted Answer

Promotional pricing typically involves reducing prices to attract customers, not increasing them. The scenario described is more akin to surge pricing or price gouging, where prices are raised due to increased demand or limited supply.

Question 8

A water ski manufacturer believes they can double their sales by producing snow skis during the other half of the year. This approach to demand management is an example of complementary products.

Accepted Answer

Complementary products are products that are used together or enhance the use of one another. In this case, the water ski manufacturer is looking to produce snow skis during the other half of the year, which can be used together with their water skis or can complement their product line. This approach can help to increase sales and meet the demand during the off-season.

Question 9

What is the difference between a reservation and an appointment?

Accepted Answer

A reservation is typically made to secure the availability of a service or facility, while an appointment is a specific time and date set for the customer to receive the service. Therefore, the term reservation is issued when the customer occupies the facility to receive service. Option A is incorrect because there is a difference between the two terms. Option B and C are incorrect because neither reservations nor appointments necessarily imply that the customer has paid in advance.

Question 10

Which one of the following statements about the patterns of a demand series is False?

Accepted Answer

The statement that the trend always increases the average level of the series is false. A trend can either increase, decrease, or even remain stable over time, depending on various factors influencing the demand.

Question 11

Polly Prognosticator was the greatest quantitative forecaster in recorded history. A skillful user of all techniques in your chapter on forecasting, she knew better than to try and develop a forecast for data that exhibited a:

Accepted Answer

A random pattern is unpredictable and cannot be modeled, making it difficult to develop a meaningful forecast. Polly Prognosticator knew not to waste time trying to forecast such data.

Question 12

One aspect of demand that makes every forecast inaccurate is:

Accepted Answer

Random variation is the unpredictable fluctuation in demand that cannot be attributed to any known cause or factor. Therefore, it is impossible to accurately forecast and it will always be present, making every forecast at least somewhat inaccurate. Trends, cyclical and seasonal variations can be identified and forecasted to some extent, but random variation is always present and adds to the overall margin of error in a forecast.

Question 13

Which one of the following basic patterns of demand is difficult to predict because it is affected by national or international events or because of a lack of demand history reflecting the stages of demand from product development to decline?

Accepted Answer

Cyclical demand is difficult to predict because it is affected by national or international events or because of a lack of demand history reflecting the stages of demand from product development to decline.

Question 14

Nathan managed to level the customer requests for his valuable services by offering reservations, deploying some promotional pricing, and engaging in yield management, all forms of ________.

Accepted Answer

The answer of Nathan managed to level the customer requests...

Question 15

Professor Willis noted that the popularity of his office hours mysteriously rose in the middle and the end of each semester, falling off to virtually no visitors throughout the rest of the year. The demand pattern at work is:

Accepted Answer

The demand pattern for office hours follows a seasonal pattern, as it rises and falls predictably with the academic calendar of the university.

Question 16

Variations in demand that cannot be predicted are said to be a(n) ________ pattern.

Accepted Answer

The answer of Variations in demand that cannot be predicted...

Question 17

"Well if you're out of Duff I'll just take my business elsewhere!" the customer shouted as he stomped out of the Quickie Mart. This unfortunate incident could be described as:

Accepted Answer

A stockout occurs when a business runs out of a particular product and is unable to meet customer demand. In this scenario, the customer is upset because the Quickie Mart is out of Duff, which means they are experiencing a stockout. Backorders and backlogs refer to orders that have not yet been fulfilled, while yield management is a strategy used by businesses to adjust prices based on demand to maximize revenue.

Question 18

There are historically three 32-month periods of generally rising prices in the stock market for every one 9-month period of falling prices. This observation leads you to conclude that the stock market exhibits a:

Accepted Answer

The fact that there are three 32-month periods of rising prices for every one 9-month period of falling prices suggests that the stock market exhibits a cyclical pattern. This means that the market tends to go through repeated cycles of growth and decline, rather than following a random or seasonal pattern or a steady trend.

Question 19

One of the basic time series patterns is random.

Accepted Answer

Randomness is a basic time series pattern. However, it is important to note that just because a time series appears random does not necessarily mean it is. Randomness can be a result of measurement error or other factors that may affect the data.

Question 20

The electricity bill at Padco was driven solely by the lights throughout the office; everything else was driven by alternative energy sources. The office was open roughly 8 hours a day, five days a week and the cleaning crew spent about the same amount of time in the offices each week night. The kilowatt hour usage for the office was best described as a:

Accepted Answer

The electricity usage pattern described is consistent throughout the week, with no significant fluctuations or seasonal changes, indicating a horizontal demand pattern.

Quiz 8: Forecasting