Business Forecasting - True and False

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Difficulty: Moderate

Learning Objective: LO 3

- Because of ease of use and simplicity, exponential smoothing is preferred over smoothing average.

Ans: False

Difficulty: Moderate

Learning Objective: LO 3

- The average, absolute difference between the forecast and demand is a popular measure of forecast error.

Ans: True

Difficulty: Moderate

Learning Objective: LO 4

- The larger the mean absolute deviation (MAD) the more accurate the forecast.

Ans: False

Difficulty: Moderate

Learning Objective: LO 4

- Forecast bias is measured by the per-period average of the sum of forecast errors.

Ans: True

Difficulty: Moderate

Learning Objective: LO 4

- Because of the development of advanced forecasting models managers no longer track forecast error.

Ans: False

Difficulty: Moderate

Learning Objective: LO 4

- Regression is used for forecasting when there is a relationship between the dependent variable, demand, and one or more independent (explanatory) variables.

Ans: True

Difficulty: Moderate

Learning Objective: LO 6

- Correlation in linear regression is a measure of the strength of the relationship between the dependent variable, demand, and an independent (explanatory) variable.

Ans: True

Difficulty: Moderate

Learning Objective: LO 6

- A linear regression model that relates demand to time is known as a linear trend line.

Ans: True

Difficulty: Moderate

Learning Objective: LO 6

- Linear regression relates two variables using a linear model.

Ans: True

Difficulty: Moderate

Learning Objective: LO 6

- A correlation coefficient is a measure of the strength of the linear relationship between an independent and a dependent variable.

Ans: True

Difficulty: Moderate

Learning Objective: LO 6

- Multiple regression analysis can be used to relate demand to two or more dependent variables.

Ans: False

Difficulty: Moderate

Learning Objective: LO 6

Multiple Choice

- Forecast methods based on judgment, opinion, past experiences, or best guesses are known as ___________ methods.

- quantitative

- qualitative

- time series

- regression

Ans: B

Difficulty: Easy

Learning Objective: LO 1

- A forecast

a. predicts what will occur in the future.

b. results from an uncertain process.

c. support strategic planning.

d. All of these answer choices are correct.

Ans: D

Difficulty: Easy

Learning Objective: LO 1

- Forecasts of product demand determine how much

a. inventory is needed.

b. product to make.

c. material to purchase from suppliers.

d. All of these answer choices are correct.

Ans: D

Difficulty: Easy

Learning Objective: LO 1

- The ______________ effect is caused in part by distortion in product demand information caused by inaccurate forecasts.

a. bullwhip

b. regression

c. error

d. None of these answer choices is correct.

Ans: A

Difficulty: Easy

Learning Objective: LO 1

- Continuous replenishment relies heavily on ____________term forecast.

a. short-

b. medium-

c. long-

d. All of these answer choices are correct.

Ans: B

Difficulty: Easy

Learning Objective: LO 1

- In ___________________ replenishment, the supplier and customer care continuously update data.

a. demand

b. ongoing

c. continuous

d. forecasted

Ans: