I.

Multiple Choice: Write the letter of the best and correct answer

1. As compared to long-range forecasts, short-range forecasts:

a. is less accurate.
b. deal with less comprehensive issues supporting management decisions.
c. employs similar methodologies.
d. all of the above
e. none of the above
2. One use of short-range forecasts is to determine:
a. planning for new products.
b. capital expenditures.
c. research and development plans.
d. facility location.
e. job assignments.
3. Forecasts are usually classified by time horizon into which three categories?
a. short-range, medium-range, and long-range
b. finance/accounting, marketing, and operations
c. strategic, tactical, and operational
d. exponential smoothing, regression, and time series
e. departmental, organizational, and industrial
4. A forecast with a time horizon of about 3 months to 3 years is typically called a:
a. along-range forecast.
b. medium-range forecast.
c. short-range forecast.
d. weather forecast.
e. strategic forecast.
5. Forecasts used for new product planning, capital expenditures, facility location or
expansion, and R&D typically utilize a:
a. short-range time horizon.
b. medium-range time horizon.
c. long-range time horizon.
d. naive method, because there is no data history.
e. trend extrapolation.
6. The three major types of forecasts used by organizations in planning future operations are:
a. strategic, tactical, and operational.
b. economic, technological, and demand.
c. exponential smoothing, Delphi, and regression.
d. causal, time-series, and seasonal.
e. departmental, organizational, and territorial.
7. Which of the following most requires long-range forecasting (as opposed to short-range or
medium-range forecasting) for its planning purposes?
a. job scheduling
b. production levels
c. cash budgeting
d. capital expenditures
e. purchasing
8. Short-range forecasts tends to ________ longer-range forecasts.
a. be less accurate than
b. be more accurate than
c. has about the same level of accuracy as
 d. employs the same methodologies as
e. deal with more comprehensive issues than
9. What forecasting systems combine the intelligence of multiple supply chain partners?
a. FORE
b. MULTISUP
c. CPFR
d. SUPPLY
e. MSCP
10. Which of the following is NOT a step in the forecasting process?
a. Determine the use of the forecast.
b. Eliminate any assumptions.
c. Determine the time horizon of the forecast.
d. Select the forecasting model.
e. Validate and implement the results.
11. The two general approaches to forecasting are:
a. qualitative and quantitative.
b. mathematical and statistical.
c. judgmental and qualitative.
d. historical and associative.
e. judgmental and associative.
12. Which of the following uses three types of participants: decision makers, staff personnel,
and respondents?
a. jury of executive opinion
b. sales force composite
c. Delphi method
d. associative models
e. time series
13. The forecasting technique that pools the opinions of a group of experts or managers is
known as:
a. the expert judgment model.
b. multiple regression.
c. jury of executive opinion.
d. market survey.
e. management coefficients.
14. Which of the following is not a type of qualitative forecasting?
a. jury of executive opinion
b. sales force composite
c. market survey
d. Delphi method
e. moving average
15. Which of the following techniques uses variables such as price and promotional
expenditures, which are related to product demand, to predict demand?
a. associative models
b. exponential smoothing
c. weighted moving average
d. moving average
e. trend projection
16. Which of the following statements about time-series forecasting is true?
a. It is always based on the assumption that future demand will be the same as past
demand.
 b. It makes extensive use of the data collected in the qualitative approach.
c. It is based on the assumption that the analysis of past demand helps predict future
demand.
d. Because it accounts for trends, cycles, and seasonal patterns, it is always more
powerful than associative forecasting.
e. All of the above are true.
17. Time-series data may exhibit which of the following behaviors?
a. trend
b. random variations
c. seasonality
d. cycles
e. They may exhibit all of the above.
18. Gradual upward or downward movement of data over time is called:
a. seasonality.
b. a cycle.
c. a trend.
d. exponential variation.
e. random variation.
19. Which of the following is not present in a time series?
a. seasonality
b. operational variations
c. trend
d. cycles
e. random variations
20. The fundamental difference between cycles and seasonality is the:
a. duration of the repeating patterns.
b. magnitude of the variation.
c. ability to attribute the pattern to a cause.
d. all of the above
e. none of the above
21. In time series, which of the following cannot be predicted?
a. large increases in demand
b. cycles
c. seasonal fluctuations
d. random variations
e. large decreases in demand
22. Which time-series model below assumes that demand in the next period will be equal to the
most recent period's demand?
a. naïve approach
b. moving average approach
c. weighted moving average approach
d. exponential smoothing approach
e. trend projection
23. A six-month moving average forecast is generally better than a three-month moving
average forecast if demand:
a. is rather stable.
b. has been changing due to recent promotional efforts.
c. follows a downward trend.
d. exceeds one million units per year.
e. follows an upward trend.
 24. Which time-series model uses BOTH past forecasts and past demand data to generate a new
forecast?
a. naïve
b. moving average
c. weighted moving average
d. exponential smoothing
e. trend projection
25. Which of the following is NOT a characteristic of exponential smoothing?
a. smoothes random variations in the data
b. uses an easily altered weighting scheme
c. weights each historical value equally
d. has minimal data storage requirements
e. uses the previous period's forecast

II. Identification

1. ________ forecasts are concerned with rates of technological progress, which can result in the
birth of exciting new products, requiring new plants and equipment.
_______________________________________________________________________________________________________ .
2. What are the three realities of forecasting that companies face?
_______________________________________________________________________________________________________ .
3. ________ forecasts address the business cycle by predicting inflation rates, money supplies,
housing starts, and other planning indicators.
_______________________________________________________________________________________________________ .
4. A skeptical manager asks what short-range forecasts can be used for. Give her three
possible uses/purposes.
_______________________________________________________________________________________________________ .

5. A skeptical manager asks what long-range forecasts can be used for. Give her three possible
uses/purposes.
_______________________________________________________________________________________________________ .

6. ________ forecasts employ one or more mathematical models that rely on historical data
and/or associative variables to forecast demand.
_______________________________________________________________________________________________________ .
7. ________ is a forecasting technique based upon salespersons' estimates of expected sales.
_______________________________________________________________________________________________________ .
8. ________ forecasts use a series of past data points to make a forecast.
_______________________________________________________________________________________________________ .
9. What are the differences between quantitative and qualitative forecasting methods?

10. Identify four quantitative forecasting methods.

_______________________________________________________________________________________________________ .
11. What is a time-series forecasting model?
_______________________________________________________________________________________________________ .
12. What is the difference between an associative model and a time-series model?
_______________________________________________________________________________________________________ .
13. A(n) ________ forecast uses an average of the most recent periods of data to forecast the next
period.
_______________________________________________________________________________________________________ .
 14. The smoothing constant is a weighting factor used in ________.
_______________________________________________________________________________________________________ .
15. ________ is a time-series forecasting method that fits a trend line to a series of historical data
points and then projects the line into the future for forecasts.
_______________________________________________________________________________________________________ .
16. Simple ________ forecasts only work well if we can assume that market demands will stay
fairly steady over time.
_______________________________________________________________________________________________________ .
17. If a barbershop operator noted that Tuesday's business was typically twice as heavy as
Wednesday's, and that Friday's business was typically the busiest of the week, business at
the barbershop is subject to ________.
_______________________________________________________________________________________________________ .
18. Identify the four components of a time series. Which one of these is rarely forecast? Why is
this so?
_______________________________________________________________________________________________________ .
19. Compare seasonal effects and cyclical effects.
_______________________________________________________________________________________________________ .
20. Give an example, other than a restaurant or other food-service firm, of an organization that
experiences an hourly seasonal pattern. (That is, each hour of the day has a pattern that
tends to repeat day after day.) Explain.
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
_______________________________________________________________