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OMIS 430- Chapter 3
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Terms in this set (84)
The expected level (value) of the forecasted quantity is the most important aspect of the forecast.
False
Which of the following is/are true about forecasts?
-It is assumed that any patterns or causal systems that were in place in the past will continue in the future.
-There will generally be some inaccuracy in the forecast, i.e., the actual values will differ from forecasted values.
-The farther into the future we try to forecast, the less accurate the forecast becomes.
Which of the following are true of good forecasts?
-Forecasts should be cost-effective.
-Forecasts should be accurate.
-Forecasts should be in meaningful (understandable) units.
Put the steps in the forecasting process in the correct order, starting at the top.
1) determine the purpose of the forecast
2) establish a time horizon
3) obtain, clean, and analyze data
4) select a forecasting technique
5) make the forecast
6) monitor the forecast
Forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers, executives, and experts.
Judgmental forecasts
Which of the following statements about forecasts is/are correct?
Forecasts enable managers to plan for the future.
Forecasts are the basis for virtually all decisions made in a business.
Executive opinions are often used to develop _________-_________of plans and __________ product development.
long- range .... new
Forecast accuracy for groups of items tends to be ______ than for individual items.
greater
Which of the following statements is/are not a correct characterization of salesforce opinions?
-The salesforce is a good, unbiased source of information about customers' wants and needs.
-While the customer may not be able to predict whether s/he will actually do what s/he wants, a salesperson can predict the follow-through.
Which of the following is/are elements of good forecasts?
-Forecasts should be cost-effective.
-Forecasts should be easy to understand and use.
-Forecasts should be reliable.
A firm is forecasting the sales of carpets based on the number of building permits issued in their county. Which technique are they using?
Associative model
Executive opinions are generally used for what type of forecasts?
Long-range
Which of the following is/are disadvantages of consumer surveys? (Check all that apply.)
-It is difficult to get a representative sample.
-Consumer opinion may be temporarily influenced by outside factors like sales pitches.
-A considerable amount of knowledge is required to correctly interpret the results for valid informatio
Which of the following statements is a correct characterization of salesforce opinions?
The salesforce has a sense of what customers want because of their direct contact with customers.
The Delphi Method is an_____________ process which seeks to find a _______________ forecast.
iterative;consensus
Which of the following is/are advantages of consumer surveys? (Check all that apply.)
-You can get information that may be unavailable anywhere else.
-Consumers are able to give direct feedback to companies.
Which of the following statements about time-series data is/are always true?
-Time series are observed at regular intervals.
-Forecasts using time series data assume that past patterns will continue in the future.
A(n) _____ uses a single previous value of a time series as the basis of a forecast. This approach can be used with a stable series, with seasonal variations, or with trend.
naive forecast
Which of the following statements about the steps in the forecasting process are true?
-The forecast may not perform as desired, so it is necessary to monitor the process.
-It is important to first determine the purpose of the forecast.
As a forecasting tool, the Delphi method is useful for what type of forecasting?
Technological forecasting
The moving average forecast uses ______ actual data values to generate a forecast.
two or more of the most recent
Time series data is a_________-__________sequence of observations taken at regular intervals.
time;ordered
Which of the following is/are disadvantages of the moving average forecast?
-Potential loss of information of less recent values by decreasing the number of values.
-All the values of the average are weighted equally.
Which of the following is the correct formula for the n-period weighted moving average?
Ft = wt-n(At-n) +... +wt-2(At-2) + wt-1(At-1) +... + wt-n(At-n)
Which of the following statements about naive forecasting are true? (Check all that apply.)
-Naive forecasts can be used with stable time series, with seasonal variations, or with trends.
-Naive forecasts use a single previous value to forecast a future value.
-Naive forecasts are easy to understand.
Which of the following statements about exponential smoothing forecasts is/are true?
-It is a sophisticated weighted averaging method
-The previous forecast is adjusted by a percentage of the forecasting error.
Which of the following is the correct formula for an n-period moving average forecast for time period t?
Ft=∑i=1nAt−i/n
Which of the following is/are advantages of the moving average forecast?
-It is easy to understand.
-It is easy to compute.
-It smooths out random variation, making patterns more evident.
Which of the following is/are advantages of the weighted moving average forecast?
-It gives more recent values higher weight.
-It is more reflective of the most recent occurrences.
Which of the following is the correct formula for the exponential smoothing forecast?
Ft=Ft-1+α(At-1-Ft-1)
Focus forecasting uses the forecasting technique that has the__________ accuracy for the given data set among a set of possible forecasting methods.
highest
Which of the following is/are disadvantages of the weighted moving average forecast?
-It requires considerable effort to determine the weights.
-It does not work well for time series with trends or seasonality.
-The value of n might be arbitrary.
What are some commonly encountered nonlinear trend types?
-Exponential trend
-Parabolic trend
-Life cycle trend
-Growth curve
Which of the following is the correct formula for the linear trend equation?
F=a+bt
Which of the following is the correct formula for the trend-adjusted exponential smoothing forecast?
TAFt+1=St+Tt
When applying focus forecasting, the method with the ______ is chosen to forecast the next time period.
highest accuracy
In time-series data, _____ are regularly repeating upward or downward movements in series values that can be tied to recurring events.
seasonal variations
Which of the following statements is/are true about the seasonal relative? (Check all that apply.)
-The seasonal percentages in the multiplicative model are referred to as as seasonal relatives.
-A seasonal relative of 1.25 indicates that the period is 25% above the average.
Trend analysis develops an equation that will describe the trend present in data. The trend may be_____________or non-linear.
linear
Cycles are _____ movements similar to seasonal variations but of _____ duration.
up-and-down; longer
Which are the correct interpretations of a and b in the trend equation F=a+bt?
a is the intercept, b is the slope of the line.
Predictor variables are:
-related to the variable of interest.
-variables whose values can be easily determined.
-used in regression to predict values of the variable of interest.
Which of the following statements is/are true about trend-adjusted exponential smoothing?
-It should be used instead of simple exponential smoothing when there is a trend present in the data.
-Unlike with trend analysis, the trend estimate can be adjusted if it changes.
Seasonal variation can occur on a daily or weekly basis, not just a monthly or quarterly basis.
True
The least squares line is the line that___________________ the sum of the___________________vertical deviations of the data points from the line.
minimizes;squared
The seasonal relative, also known as the seasonal________,is the seasonal percentage applied in the__________ model.
index;multiplicative
The most common approach for forecasting cyclical data uses variables that relates to, and _____, the variable of interest.
lead
In the equations for the coefficients of a line, what is the b term?
slope
The essence of associative techniques is the development of an equation that summarizes the effects of _____.
predictor variables
Which of the following is the correct formula for the previous forecast plus smoothed error using trend-adjusted exponential smoothing?
St=TAFt+α(At-TAFt)
Which of the following is the correct equation for the least squares regression line?
Yc=a+bx
In the equations for the coefficients of a line, what is the n term?
Number of periods
In the equations for the coefficients of a line, what is the y term?
Value of the time series
Which of the following statements about the standard error of the estimate is true?
It measures the scatter of the data points around the line.
For an indicator to be valid, there should be ______ correlation between the two variables.
high
Which of the following statements about correlation is/are true?
-A correlation close to -1 indicates a strong relationship between two variables.
-A correlation > 0 indicates a positive relationship.
-A correlation close to +1 indicates a strong relationship between two variables.
Which of the following is the correct formula for the intercept a?
a=∑y−b∑x/n
A value of 0.25 or less of r2 indicates a __________ predictor.A value between 0.25 and 0.8 indicates a _________ predictor
poor; moderate
Which is the correct formula for the standard error of the estimate?
Se = √Σ(y-yc)2/n-2
What type of relationship should there be between an indicator and the movements of the variable?
Logical
Which of the following is/are true statements about simple linear regression?
-All data points carry equal weight.
-If the correlation is small, the predictor variable is not of much value and another variable may be better.
Which of the following is the correct formula for the current trend estimate using trend-adjusted exponential smoothing?
Tt=Tt-1+β(TAFt-TAFt-1-Tt-1)
Which of the following is the correct formula for forecast error in period t?
et=At-Ft
Correlation measures:
both the strength and direction of the relationship between two variables.
r2 measures the degree of variation in the values of the _____ variable that is "explained" by the _________ variable.
dependent; independent
Which is the correct interpretation of MSE?
MSE is the average squared forecast error.
Which of the following is the correct formula for MSE?
MSE=∑(Actualt−Forecastt)2n−1
Which of the following is/are true statements about simple linear regression?
-It is important to plot the data to see if a linear model is appropriate.
-It applies only when one predictor variable is used.
Which of the following statements about forecast error is/are true?
-Positive errors occur when the forecast is too low.
-Negative errors occur when the forecast is too high.
-Forecast error is the difference between the actual and predicted values in a given period.
Which is the correct interpretation of MAPE?
MAPE is the average absolute percent error.
Which of following situations signify that a forecasting method may need to be adjusted or changed?
-Forecast errors fall outside the limits of a control chart.
-Forecast errors exhibit a pattern within a control chart.
Which of the following is the correct formula for MAPE?
MAPE=∑|Actualt−Forecastt|ActualtX100/n
Which of the following represents an error of zero on a control chart?
The center line
Which of the following is used to calculate the standard deviation of the distribution of errors?
s = MSE
Which of the following are possible sources of forecast errors?
-Irregular variations
-Incorrect forecasting method or interpretation
-Random variation
-Changes in the variables or relationships
What is plotted on a control chart?
The errors
A tracking signal compares the cumulative forecast error to the MAD in order to detect any________ in errors over time.
bias
Identify the correct formula to determine the upper control limit of a control chart to monitor the forecast.
0+zMSE
What limits are typically used with the tracking signal?
±4
Bias is the persistent tendency for forecasts to do what?
Be greater or less than the actual values
Which of the following are considerations to be taken into account when choosing a forecasting technique?
The availability of computer software.
The cost of the method.
The availability of data.
Forecasts are the basis for many decisions and an essential input for what?
Matching supply with demand
A value of zero (0) for a tracking signal indicates ______.
no bias in the forecast
Which of the following are considerations to be taken into account when choosing a forecasting technique?
...
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