Unit 2 Quiz: Mastering Demand Forecasting Techniques

Unit 2 Quiz  Due Oct 29 at 9:59 Attempt Time Score LATEST Attempt 1 37 minutes 19 out of 25 * * Some questions not yet graded Correct answers are hidden. Score for this attempt: 19 out of 25 * Submitted Oct 29 at 9:21pm This attempt took 37 minutes. Question 1 1 / 1 pts Which of the following forecasting methodologies is considered a causal forecasting technique? Exponential smoothing Weighted moving average Linear regression Historical analogy Market research Causal forecasting, which we discuss using the linear regression technique, assumes that demand is related to some underlying factor or factors in the environment. Incorrect Question 2 0 / 1 pts

A company has actual unit demand for three consecutive years of 124, 126, and 135. The respective forecasts for the same three years are 120, 120, and 130. Which of the following is the resulting MAD value that can be computed from this data? A) 1 B) 3 C) 5 D) 15 E) 123 A B C D E Question 3 1 / 1 pts As a consultant you have been asked to generate a unit demand forecast for a product for year 2018 using exponential smoothing. The actual demand in year 2017 was 750. The forecast demand in year 2017 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2018 forecast value? A) 766 B) 813 C) 897 D) 1,023

E) 1,120 A B C D E Forecast = 960 + 0.3 x (750 − 960) = 897 Question 4 1 / 1 pts In general, which forecasting time frame compensates most effectively for random variation and short term changes? Short-term forecasts Quick-time forecasts Long range forecasts Medium term forecasts In general, the short-term models compensate best for random variation and adjust for short-term changes (such as consumers' responses to a new product).

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Question 5 1 / 1 pts A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values (i.e., year 2014 = 100, year 2015 = 120, year 2016 = 140, and year 2017 = 210), which of the following is the simple moving average forecast for year 2018? 100.5 140 142.5 145.5 Forecast for 2018 = (100 + 120 + 140 + 210) / 4 = 570 / 4 = 142.5 Question 6 1 / 1 pts In most cases, demand for products or services can be broken down into several components. Which of the following is not considered a component of demand? A) Average demand for a period B) A trend C) Seasonal elements D) Past data E) Autocorrelation A B

C D E In most cases, demand for products or services can be broken down into six components: average demand for the period, a trend, seasonal elements, cyclical elements, random variation, and autocorrelation. Question 7 1 / 1 pts Which of the following forecasting methods uses executive judgment as its primary component for forecasting? A) Historical analogy B) Time series analysis C) Panel consensus D) Market research E) Linear regression A B C D

E In a panel consensus, the idea that two heads are better than one is extrapolated to the idea that a panel of people from a variety of positions can develop a more reliable forecast than a narrower group. Panel forecasts are developed through open meetings with free exchange of ideas from all levels of management and individuals. When decisions in forecasting are at a broader, higher level (as when introducing a new product line or concerning strategic product decisions such as new marketing areas), the term executive judgment is generally used. Question 8 1 / 1 pts A company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values (i.e., year 2015 = 160, year 2016 = 140 and year 2017 = 170), and we want to weight year 2014 at 30%, year 2015 at 30% and year 2016 at 40%, which of the following is the weighted moving average forecast for year 2018? A) 170 B) 168 C) 158 D) 152 E) 146 A B C D E Forecast for 2018 = (160x0.3) + (140x0.3) + (170x0.4) = 158

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Question 9 1 / 1 pts In business forecasting, what is usually considered a short-term time period? A) Four weeks or less B) More than three months C) Six months or more D) Less than three months E) One year A B C D E In business forecasting short term usually refers to under three months. Question 10 1 / 1 pts In a forecasting model using simple moving average, the shorter the time span used for calculating the moving average, the closer the average follows volatile trends. True False

: While a shorter time span produces more oscillation, there is a closer following of the trend. Conversely, a longer time span gives a smoother response but lags the trend. Question 11 1 / 1 pts The frequency of adding to productive capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently True False See exhibit 4.2 and narrative on "Frequency of Capacity additions." Question 12 1 / 1 pts The frequency of adding to productive capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently. True False See exhibit 4.2 and narrative on "Frequency of Capacity additions."

Question 13 1 / 1 pts A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate. True False The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops. This is partially due to lower operating and capital cost, because a piece of equipment with twice the capacity of another piece typically does not cost twice as much to purchase or operate. Question 14 1 / 1 pts When deciding to add capacity to a factory which of the following need not be considered? Maintaining system balance

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The frequency of capacity additions Use of external capacity Immediate product demand Many issues must be considered when adding or decreasing capacity. Three important ones are maintaining system balance, frequency of capacity additions or reductions, and the use of external capacity. In many cases, the size of a plant may be influenced by factors other than the internal equipment, labor, and other capital expenditures. A major factor may be the cost to transport raw materials Question 15 1 / 1 pts If the actual output of a piece of equipment during an hour is 500 units and its best operating level is at a rate of 400 units per hour, which of the following is the capacity utilization rate? A) 0.75 B) 1.00 C) 1.25 D) 1.33 E) 100 A B C D

E Capacity utilization rate: 500 units / 400 units best operating level = 1/25. Question 16 1 / 1 pts If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate? A) 0.75 B) 1.00 C) 1.33 D) 2.33 E) 300 A B C D E 300 units of output divided by 400 units best operating level = 0.75 Question 17 1 / 1 pts

A capacity cushion is the amount of capacity less than expected demand. True False A capacity cushion is the amount of capacity in excess of expected demand Question 18 1 / 1 pts Planning service capacity involves consideration of the mean arrival rate and the mean service rate. When the mean arrival rate exceeds or gets too close to the mean service rate the quality of the service declines. The operating point is the ratio of mean service rate to mean arrival rate. According to the text, what is the best operating point for the typical service? 120% 100% 90% 70% The best operating point is near 70 percent of the maximum capacity. This is enough to keep servers busy but allows enough time to serve customers individually and keep enough capacity in reserve so as not to create too many managerial headaches Question 19 1 / 1 pts In a decision tree problem involving capacity planning, there was a random outcome node with three random outcomes (A,B, and C) which followed a decision node. The probabilities for A, B and C: P(A)=0.4, P(B) = 0.6 and P(C) = 0.2. Payoff following A,B and C respectively are $10000, $5000 and $2000. Expected value of that random outcome node is:

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$7400 $7000 $17000 Cannot be determined since there is something wrong with the data given. Since the probabilities of a random outcome node should add up to 1.0 and in this example , it adds up to 1.2, there is something wrong with the given problem data. Question 20 1 / 1 pts Compared with a service operation, a manufacturing operation's capacity is which of the following? More dependent on time and location Subject to more volatile demand fluctuations Utilization more directly impacts quality Demand can be smoothed by inventory policies Service capacity is more time – and location-dependent, (than manufacturing capacity) it is subject to more volatile demand fluctuations, and utilization directly impacts service quality. Also, unlike goods, services cannot be stored for later use. Question 21 Not yet graded / 5 pts

Discuss the basic differences between the mean absolute deviation, MAD, and mean absolute percent error, MAPE. Your Answer: MAD is computed using the differences between the actual demand and the forecast demand without regard to sign. It equals the sum of the absolute deviations divided by the number of data points, or, stated in equation form. And additionally measure of error that is often useful is the mean absolute percent error (MAPE). This measure gauges the error relative to the demand as a percentage. The basic difference between the two is that: 1 . MAD figures out to be an absolute number . MAPE is calculated as a percent error. 2. MAD is not dependent on MAPE for its calculation. MAPE is dependent on MAD as its calculation can not be done without calculating MAD. 3. MAD is much used as compared to MAPE. Ref Chase, F.R.J. R. (2022). Operations and Supply Chain Management: The Core (6th ed.). McGraw-Hill Higher Education (US). https://mbsdirect.vitalsource.com/books/9781265402167 The mean absolute percent error can be used to compare forecasting accuracy when the average demand for the items in each forecast is different. The mean absolute percent error (MAPE) is the expected error measured as a fraction of demand, whereas the MAD is just the average error of the forecast. The MAPE is usually a better measure. Quiz Score: 19 out of 25 Previous Next

MG 375 Unit 2 Quiz

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