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OM review practice questions
- The business analyst for Video Sales, Inc. wants to forecast this year's demand for DVD decoders based on the following historical data: Year Demand 5 Years ago 900 4 Years ago 700 3 Years ago 600 2 Years ago 500 Last Year 300 What is the forecast for this year using the naive approach? A) 100 B) 200 C) 300 D) 500 E) 600 - A) 100
- Forecasting techniques generally assume an existing causal system that will continue to exist in the future. ⊚ true ⊚ false - true
- For new products in a strong growth mode, a low alpha will minimize forecast errors when using exponential smoothing techniques. ⊚ true ⊚ false - false
- Once accepted by managers, forecasts should be held firm regardless of new input since many plans have been made using the original forecast. ⊚ true ⊚ false - false
- Forecasts help managers both to plan the system itself and to provide valuable information for using the system. ⊚ true ⊚ false - true
- Organizations that are capable of responding quickly to changing requirements can use a shorter forecast horizon and therefore benefit from more accurate forecasts. ⊚ true ⊚ false - true
- The purpose of the forecast should be established first so that the level of detail, amount of resources, and accuracy level can be understood. ⊚ true ⊚ false - true
- A consumer survey is an easy and sure way to obtain accurate input from future customers since most people enjoy participating in surveys. ⊚ true
- An advantage of trend-adjusted exponential smoothing over the linear trend equation is its ability to adjust over time to changes in the trend. ⊚ true ⊚ false - true
- If a pattern appears when a dependent variable is plotted against time, one should use time series analysis instead of simple linear regression. ⊚ true ⊚ false - true
- The sample standard deviation of forecast error is estimated by the square root of MSE. ⊚ true ⊚ false - true
- MAD is equal to the square root of MSE, which is why we calculate the easier MSE and then calculate the more difficult MAD. ⊚ true ⊚ false - false
- The use of a control chart assumes that random errors are normally distributed about a mean of zero. ⊚ true ⊚ false - true
- Bias is measured by the ratio of the cumulative sum of forecast errors to the mean absolute deviation (MAD). ⊚ true ⊚ false -
true
- Suppose a four-period weighted average is being used to forecast demand. Weights for the periods are as follows: wt-4 = 0.1, wt-3 = 0.2, wt-2 = 0.3 and wt-1 = 0.4. Demand observed in the previous four periods was as follows: At-4 = 380, At-3 = 410, At-2 = 390, and At-1 = 400. What will be the demand forecast for period t? A) 402 B) 397 C) 399 D) 393 E) 403 - B) 397
- Suppose a three-period weighted average is being used to forecast demand. Weights for the periods are as follows: wt-3 = 0.2, wt-2 = 0.3 and wt-1 = 0.5. Demand observed in the previous three periods was as follows: At-3 = 2,200, At-2 = 1,950, and At-1 = 2,050. What will be the demand forecast for period t? A) 2, B) 2, C) 1, D) 2, E) 1,875 - D) 2,
- When choosing a forecasting technique, a critical trade-off that must be considered is that between: A) time series and associative. B) seasonality and cyclicality. C) length and duration. D) simplicity and complexity. E) cost and accuracy. - E) cost and accuracy.
- Detecting nonrandomness in errors can be done using: A) MSEs. B) MAPs. C) control charts. D) correlation coefficients. E) strategies. - C) control charts.
- Gradual, long-term movement in time series data is called: A) seasonal variation. B) cycles. C) irregular variation. D) trend. E) random variation. - D) trend.
- For the data given below, what would the naive forecast be for period 5 including any trend? Period Value 1 58 2 59 3 60 4 61 A) 58 B) 62
C) 59.
D) 61
E) cannot tell from the data given - D) 61
- Which is not a characteristic of simple moving averages applied to time series data? A) smoothes random variations in the data B) weights each historical value equally C) lags changes in the data D) requires only last period's forecast and actual data E) smoothes real variations in the data - D) requires only last period's forecast and actual data
- Given an actual demand of 59, a previous forecast of 64, and an alpha of 0.3, what would the forecast for the next period be using simple exponential smoothing? A) 36. B) 57. C) 60. D) 62. E) 65.5 - D) 62.
- A manager uses the following equation to predict monthly receipts: Yt = 40,000 + 150t. What is the forecast for July if t = 0 in April of this year? A) 40, B) 40, C) 42, D) 42, E) 42,400 - A) 40,
C) 5
- Given forecast errors of 5, 0,−4, and 3, what is the mean absolute deviation? A) 4 B) 3 C) 2. D) 2 E) 1 - B) 3
- The two most important factors in choosing a forecasting technique are: A) cost and time horizon. B) accuracy and time horizon. C) cost and accuracy. D) quantity and quality. E) objective and subjective components. - C) cost and accuracy.
- Which of the following is not necessarily an element of a good forecast? A) estimate of accuracy B) timeliness C) meaningful units D) low cost E) written - D) low cost
- A managerial approach toward forecasting which seeks to actively influence demand is: A) reactive. B) proactive. C) influential. D) protracted.
E) retroactive. - B) proactive.
- Given the following historical data, what is the simple three-period moving average forecast for period 6? Period Value 1 73 2 68 3 65 4 72 5 67 A) 67 B) 115 C) 69 D) 68 E) 68.67 - D) 68
- Given the following historical data and weights of 0.5, 0.3, and 0.2, what is the three-period moving average forecast for period 5? Period Value Period Value 1
3 Years ago 18, 2 Years ago 20, Last Year 21, What is the forecast for this year using the naive approach? A) 18, B) 19, C) 21, D) 22, E) 22,800 - D) 22,
- The president of State University wants to forecast student enrollments for this academic year based on the following historical data: Year Enrollments 5 Years ago 15, 4 Years ago 16, 3 Years ago 18, 2 Years ago 20, Last Year 21, What is the forecast for this year using a four-year simple moving average?
A) 18,
B) 19,
C) 21,
D) 22,
E) 22,800 -
E) 18,
- The business analyst for Video Sales, Inc. wants to forecast this year's demand for DVD decoders based on the following historical data: Year Enrollments 5 Years ago 900 4 Years ago 700 3 Years ago 600 2 Years ago 500 Last Year 300 What is the forecast for this year using exponential smoothing with alpha = 0.4, if the forecast for two years ago was 750? A) 163 B) 180 C) 300 D) 420 E) 510 - E) 510
- Professor Very Busy needs to allocate time next week to include time for office hours. He needs to forecast the number of students who will seek appointments. He has gathered the following data:
Last Year 20, The previous trend line had predicted 18,500 for two years ago, and 19,700 for last year. What was the mean absolute deviation for these forecasts? A) 100 B) 200 C) 400 D) 500 E) 800 - C) 400
- The dean of a school of business is forecasting total student enrollment for this year's summer session classes based on the following historical data: Year Enrollment Four years ago 2, Three years ago 2, Two years ago 2, Last year 3, What is this year's forecast using a three-year simple moving average? A) 2, B) 2, C) 2, D) 2, E) 2,333 - A) 2,
- The dean of a school of business is forecasting total student enrollment for this year's summer session classes based on the following historical data: Year Enrollment Four years ago 2, Three years ago 2, Two years ago 2, Last year 3, What is this year's forecast using the naive approach? A) 2, B) 2, C) 2, D) 3, E) 3, CHAPTER 3 END - E) 3,
- Aggregate planning is capacity planning that typically covers a time horizon of one to three months. ⊚ true ⊚ false - false
- The goal of aggregate planning is to achieve a production plan that effectively utilizes the organization's resources to meet expected demand. ⊚ true ⊚ false - true
⊚ false - true
- Aggregate planners commonly use trial-and-error methods in developing aggregate plans. ⊚ true ⊚ false - true
- Aggregate planners typically use mathematical techniques such as linear programming for planning. ⊚ true ⊚ false - false
- Disaggregating an aggregate plan leads to a master schedule. ⊚ true ⊚ false - true
- The master schedule indicates the quantity and timing for delivery of a product, but not the dates production will need to start. ⊚ true ⊚ false - true
- Departmental budgeting is an example of aggregate planning. ⊚ true ⊚ false - false
- Available-to-promise in the first week is equal to beginning inventory plus MPS quantity, if any, less committed customer orders before the next MPS quantity.
⊚ true ⊚ false - true
- After the first period of the planning horizon, available-to-promise is computed only for those periods in which there is an MPS quantity. ⊚ true ⊚ false - true
- In the master production schedule, production is planned for the next period whenever the available-to-promise quantity becomes negative. ⊚ true ⊚ false - false
- Accommodating peak demand and effectively using labor resources during periods of low demand would be the main goals of aggregate planners in A) manufacturing. B) military. C) archaeology. D) libraries. E) financial services. - E) financial services.
- Which of the following is an input to aggregate planning? A) ending inventory B) demand forecasts for each period C) customer levels D) setup costs E) quantity discounts - B) demand forecasts for each period
