Chapter 3

Question 1

What is Forecasting?

Answer 1

estimating the future demand for products and services and the resources necessary to produce them

Question 2

Another name for Forecasting?

Answer 2

Sales Forecasts

Question 3

What are Long Range forecasts?

Answer 3

span a year or longer, and estimate demand for entire product lines (lawn products)

Question 4

What are Medium Range forecasts?

Answer 4

span several months and group products into product families (lawn mowers)

Question 5

What are Short Range forecasts?

Answer 5

span a few weeks and focus on specific products (lawn mower model)

Question 6

What is a Demand Estimate?

Answer 6

starting point for management teams to develop sales forecasts

Question 7

What is an Educated Guess?

Answer 7

person uses his or her intuition and experience to estimate a forecast

Question 8

What is an Executive Committee Consensus?

Answer 8

knowledgeable executives from various departments within the organization form a a committee to develop a sales forecast

Question 9

What is the Delphi Method?

Answer 9

achieve consensus within a committee

Question 10

What is Quantitative Forecasting?

Answer 10

mathematical models based on historical data

Question 11

What is a Time Series?

Answer 11

set of observed values measured over successive time periods (monthly sales for last 2 years)

Question 12

Forecast Accuracy

Answer 12

how close forecasts come to actual data

Question 13

Seasonality

Answer 13

data pattern that repeats itself after a period of time

Question 14

Linear Regression Analysis

Answer 14

model that establishes a relationship between a dependent variable and one or more independent variables

Question 15

Trends are:

Answer 15

upward or downward sloping line

Question 16

Cycle

Answer 16

data pattern that may cover several years before it repeats itself again

Question 17

Random Fluctuation (Noise)

Answer 17

random variation or unexplained causes

Question 18

Simple Linear Regression

Answer 18

only one independent variable

Question 19

Coefficient of Correlation

Answer 19

relationship between y and x, sign of “r” shows the direction of the relationship and the absolute value of “r” shows the strength

Question 20

Coefficient of Determination

Answer 20

how much of the total variation in the dependent variable “y” is explained by “x”

Question 21

Multiple Regression

Answer 21

two or more independent variables

Question 22

Standard Deviation

Answer 22

measure of how historical data points have been dispersed about the trend line

Question 23

Noise Dampening

Answer 23

forecasts that have little period to period fluctuations

Question 24

High Impulse Response

Answer 24

forecasts that respond very fast to changes in historical data

Question 25

Low Impulse Response

Answer 25

forecasts reflect few of the changes in historical data

Question 26

Moving Average

Answer 26

average data from few recent periods and this average becomes the forecast for the next period

Question 27

Exponential Smoothing

Answer 27

weights data from recent periods heavier than data from more distant periods

Question 28

Low Cost / Accuracy

Answer 28

statistical models, historical data

Question 29

High Cost / Accuracy

Answer 29

complex models, Delphi, and market research