Module 02

Question 1

A statement about the future value of a variable of interest.

Answer 1

Forecast

Question 2

T/F

The primary goal of operations management is to match supply to demand.

Answer 2

True

Question 3

T/F

There are three important aspects of forecast: Expected Level of Demand, Accuracy, and Reliability.

Answer 3

False

Answer: There are only two important aspects of forecast.

Question 4

The level of demand may be a function of some structural variations such as trend or seasonal variation.

Answer 4

Expected Level of Demand

Question 5

Related to the potential size of forecast error.

Answer 5

Accuracy

Question 6

Pertain to ongoing operations. Serves as a basis to predict requirements for labor and other resources needed to respond to changes in demand.

Answer 6

Short-range Forecasts

Question 7

Needed for strategic changes such as developing new products or services, new equipment, new facilities, or new markets.

Answer 7

Long-range Forecasts

Question 8

Cost/profit estimate, cash management

Answer 8

Accounting

Question 9

Cash flow and funding, equipment/equipment reading

Answer 9

Finance

Question 10

Hiring/recruiting/training, Layoff planning

Answer 10

Human Resources

Question 11

Pricing, promotion, strategy

Answer 11

Marketing

Question 12

IT/IS Systems, Internet Services

Answer 12

MIS

Question 13

Schedules, material requirements planning (MRP), workloads

Answer 13

Operations

Question 14

New products and services, revision of current features

Answer 14

Product/Service Design

Question 15

Relates to the percentage of capacity being used. Accurate forecasts can help managers plan tactics to match capacity with demand, thereby achieving high yield levels.

Answer 15

Yield Management

Question 16

Generally involves long-range plans related to: types of products and services to offer; facility and equipment levels; and facility location.

Answer 16

Plan the System

Question 17

Generally involves short- and medium-range plans related to: inventory management, workforce levels, purchasing, budgeting, production, and scheduling.

Answer 17

Plan the Use of the System

Question 18

T/F

Forecasts are perfect, that is, actual results usually differ from predicted values.

Answer 18

False

Answer: Forecasts are not perfect, that is, actual results usually differ from predicted values. Allowances should be made for forecast errors.

Question 19

Those that can respond quickly to changes in demand - require shorter forecasting horizons.

Answer 19

Flexible Business Organizations

Question 20

T/F

Elements of a Good Forecast should be timely, accurate, reliable, be expressed in meaningful units, in writing, be simple to understand and use, and be cost-effective.

Answer 20

True

Question 21

Inaccurate forecasts can lead to _

Answer 21

Shortages and excesses throughout the supply chain

Question 22

The first step in the forecasting process.

Answer 22

Determine the purpose of the forecast

Question 23

The second step in the forecasting process

Answer 23

Establish a time horizon

Question 24

The third step in the forecasting process

Answer 24

Obtain, clean, and analyze appropriate data

Question 25

The fourth step in the forecasting process

Answer 25

Select a forecasting technique

Question 26

The fifth step in the forecasting process

Answer 26

Make the forecast

Question 27

The sixth and final step in the forecasting process

Answer 27

Monitor the forecast errors

Question 28

T/F Error = Actual - Forecast

Answer 28

True

Question 29

Relies on the analysis of subjective inputs obtained from various sources (e.g., consumer surveys and sales staff) that provide insights that are not otherwise available.

Answer 29

Judgmental Forecasting

Question 30

Simply attempts to project past experiences into the future.

Answer 30

Time-series Forecasts

Question 31

A small group of upper-level managers may meet and collectively develop a forecast.

Answer 31

Executive Opinions

Question 32

Members of the sales or customer service staff can be good sources of information due to their direct contact with customers and may be aware of plans customers may be considering for the future.

Answer 32

Sales Force Opinions

Question 33

Since consumers ultimately determine demand, it makes sense to solicit input from them.

Answer 33

Consumer Surveys

Question 34

Managers may solicit opinions from other managers or staff people or outside experts to help with developing a forecast. The Delphi Method is an iterative process intended to achieve a consensus.

Answer 34

Other Approaches

Question 35

It is an iterative process in which managers and staff complete a series of questionnaires, each developed from the previous one, to achieve a consensus forecast.

Answer 35

Delphi Method

Question 36

These techniques rely on hard data. This technique involve either the projection of historical data or the development of associative methods that attempt to use causal variables to make a forecast.

Answer 36

Quantitative Forecasting

Question 37

Forecasts that project patterns identified in recent time-series observations.

Answer 37

Time-Series Forecasts

Question 38

A time-ordered sequence of observations taken at regular time intervals.

Answer 38

Time-Series

Question 39

A long-term upward or downward movement in data.

Answer 39

Trend

Question 40

Short-term, fairly regular variations related to the calendar or time of day.

Answer 40

Seasonality

Question 41

Wavelike variations of more than one year duration.

Answer 41

Cycles

Question 42

Due to unexpected or unusual circumstances that do not reflect typical behavior.

Answer 42

Irregular Variations

Question 43

Residual variations that remain after all other behaviors have been accounted for.

Answer 43

Random Variables

Question 44

Uses a single previous value of a time series as the basis for a forecast. The forecast for a time period is equal to the previous time period's value.

Answer 44

Naive Forecast

Question 45

These techniques work best when a series tends to vary about an average. They can handle step changes or gradual changes in the level of a series.

Answer 45

Averaging

Question 46

What are the techniques under averaging?

Answer 46

Moving Average, Weighted Moving Average, Exponential Smoothing

Question 47

Technique that averages a number of the most recent actual values in generating a forecast.

Answer 47

Moving Average

Question 48

The most recent values in a time series are given more weight in computing a forecast.

Answer 48

Weighted Moving Average

Question 49

A sophisticated weighted averaging method that is still relatively easy to use and understand.

Answer 49

Exponential Smoothing

Question 50

Analysis of trend involves developing an equation that will suitably describe the trend (assuming that trend is present in the data). Trends may be linear or nonlinear.

Answer 50

Techniques for Trends

Question 51

Regularly repeating movements in series that can be tied to recurring events.

Answer 51

Seasonal Variations

Question 52

Seasonality is expressed as a quantity that gets added to or subtracted from the time-series average in order to incorporate seasonality.

Answer 52

Additive

Question 53

Seasonality is expressed as a percentage of the average (or trend) amount, which is then used to multiply the value of a series in order to incorporate seasonality

Answer 53

Multiplicative

Question 54

The seasonal percentage used in the multiplicative seasonally adjusted forecasting model; seasonal indices.

Answer 54

Seasonal Relatives

Question 55

The most widely used method for computing seasonal relatives since it effectively accounts for any trend (linear or curvilinear) that might be present in the data. The use of the software is recommended since the manual computation is a bit cumbersome.

Answer 55

Centered Moving Average

Question 56

It is an alternative way. Each seasonal relative is the average for that season divided by the average for all seasons. It can be used to obtain fairly good values of seasonal relatives as long as the ratio of the intercept to the slope is large.

Answer 56

Simple Average (SA) Method

Question 57

Similar to seasonal variations but are of longer duration.

Answer 57

Cycles

Question 58

Tracking forecast errors and analyzing them can provide useful insight into whether forecasts are performing satisfactorily.

Answer 58

Monitoring the Forecast

Question 59

A very useful tool for detecting non-randomness in errors.

Answer 59

Control Charts

Question 60

Relates the cumulative forecast to the average absolute error (MAE) in order to detect any bias in errors over time.

Answer 60

Tracking Signal

Question 61

The persistent tendency for forecasts to be greater or less than the actual values of a time series.

Answer 61

Bias

Question 62

T/F The factors to consider in choosing a forecasting technique are cost, accuracy, availability of historical data, availability of forecasting software, time needed to gather and analyze data and prepare a forecast, and forecast horizon.

Answer 62

True

Question 63

The better forecasts are, the more able organizations will be to take advantage of future opportunities and reduce potential risks.

Answer 63

Operations Strategy

Question 64

T/F If non-randomness is found, corrective action is not needed.

Answer 64

False Answer: If non-randomness is found, corrective action is needed.

Question 65

T/F The larger the ratio, the smaller the error.

Answer 65

True