Ch. 4

Question 1

Process of predicting the future as accurately as possible, given all of the information available.

Answer 1

Forecasting

Question 2

What is the goal of forecasting?

Answer 2

Come as close as possible to an accurate picture of the future.

Question 3

What are the principles of forecasting?

Answer 3

Should be an integral part of the decision making activities of management.

Question 4

What are common forecasting time horizons?

Answer 4

Short-range, Medium-range, and long-range forecasts.

Question 5

What is the influence of the product life cycle of forecasting?

Answer 5

Key input for production planning, but demand is influenced by the stage of your product’s life cycle.

Question 6

Activity of estimating the quantity of a products or service that consumers will purchase.

Answer 6

Demand forecasts

Question 7

Consider several variables that are related to the quantity being predicted.

Answer 7

Associative forecasting

Question 8

What is the first step when making a forecast?

Answer 8

Determine the use of the forecast

Question 9

5 basic steps when making a forecast?

Answer 9

Determine the use, determine horizon, select forecasting models, gather data, generate the forecast.

Question 10

What are two factors used to determine forecasting model?

Answer 10

If there is data available use quantitative, if no data, use qualitative.

Question 11

What are two basic groups of forecasting methods?

Answer 11

Qualitative & Quantitiave

Question 12

What are 3 ways forecasting models differ?

Answer 12

Time horizon, amount of data needed, and number of variables.

Question 13

Someone who predicts their own sales

Answer 13

Composite forecasting method

Question 14

What are 3 common qualitative methods?

Answer 14

Jury of executive opinion, Delphi method, sales force composite.

Question 15

What is a major weakness with using executive opinion from a meeting
to develop a forecast?

Answer 15

Groupthink

Question 16

Which forecasting method suffers from the possibility of having one
person’s opinion dominate the forecast?

Answer 16

Jury of Executive Opinion

Question 17

What method is especially useful for forecasting long-term product
demand and technological changes?

Answer 17

Delphi method

Question 18

What are the two categories of quantitative forecasting methods?

Answer 18

Naive approach, moving averages, exponential smoothing, trend projection, linear regression.

Question 19

Forecast based only on past values, no other variables important

Answer 19

Time-series forecasting

Question 20

What are four basic data patterns?

Answer 20

Trend, seasonal, cycles, and random variations

Question 21

When should multiple regression be used for forecasting?

Answer 21

Good to use when there are multiple independent variables.

Question 22

Assume that the demand in the next period will be equal to the demand in the most recent period.

Answer 22

Naive approach

Question 23

What is the problem with using a moving average to forecast a pattern
with a trend?

Answer 23

Does not forecast trends well, requires extensive data

Question 24

If we have a smaller number of observations in a moving average, is the
forecast more or less responsive to changes in the data?

Answer 24

more responsive

Question 25

What is the sum of all weights in a weighted moving average?

Answer 25

Weights and demand for the period

Question 26

What is the general equation for a linear trend line?

Answer 26

y=a+bx

Question 27

How strong is the linear relationship between the variables?

Answer 27

Correlation

Question 28

When should multiple regression be used for forecasting?

Answer 28

If there is more than one independent variable.

Question 29

What are common measures of forecasting error?

Answer 29

Comparing forecasting values with the actual values.

Question 30

What are three common criteria for selecting forecasting packages?

Answer 30

Accuracy, timeliness, cost savings

Question 31

What are general principles for selecting forecasting methods?

Answer 31

Use simple methods unless substantial evidence exists that complexity helps, match forecasting methods to situation, use structured rather than unstructured methods.