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Exam 4: Forecasting

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Question 1

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Jim's department at a local department store has tracked the sales of a product over the last ten weeks.Forecast demand using exponential smoothing with an alpha of 0.4,and an initial forecast of 28.0 for period 1.Calculate the MAD.What do you recommend?

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The tracking signal RSFE/MAD ...

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Question 2

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A fundamental distinction between trend projection and linear regression is that

A) trend projection uses least squares while linear regression does not.
B) only linear regression can have a negative slope.
C) in trend projection the independent variable is time;in linear regression the independent variable need not be time,but can be any variable with explanatory power.
D) trend projection can be a function of several variables,while linear regression can only be a function of one variable.
E) trend projection uses two smoothing constants,not just one.

F) A) and B)
G) C) and D)

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Question 3

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A time-series model uses a series of past data points to make the forecast.

Identify three advantages of the moving average forecasting model.Identify three disadvantages of the moving average forecasting model.

Marie Bain is the production manager at a company that manufactures hot water heaters.Marie needs a demand forecast for the next few years to help decide whether to add new production capacity.The company's sales history (in thousands of units)is shown in the table below.Use exponential smoothing with trend adjustment,to forecast demand for period 6.The initial forecast for period 1 was 11 units;the initial estimate of trend was 0.The smoothing constants are α = .3 and β = .3.

Identify the seven steps involved in forecasting.

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

Demand for a certain product is forecast to be 800 units per month,averaged over all 12 months of the year.The product follows a seasonal pattern,for which the January monthly index is 1.25.What is the seasonally-adjusted sales forecast for January?

Given the following data,calculate the three-year moving averages for years 4 through 10.

Explain the role of regression models (time series and otherwise)in forecasting.That is,how is trend projection able to forecast? How is regression used for causal forecasting?

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

The last four months of sales were 8,10,15,and 9 units.The last four forecasts were 5,6,11,and 12 units.The Mean Absolute Deviation (MAD) is

Given an actual demand of 61,a previous forecast of 58,and an alpha of .3,what would the forecast for the next period be using simple exponential smoothing?

Which of the following values of alpha would cause exponential smoothing to respond the most slowly to forecast errors?

________ are useful if we can assume that market demands will stay fairly steady over time.

In trend projection,a negative regression slope is mathematically impossible.

When one constant is used to smooth the forecast average and a second constant is used to smooth the trend,the forecasting method is ________.

A six-month moving average forecast is generally better than a three-month moving average forecast if demand

The last seven weeks of demand at a new car dealer are shown below.Use a three-period weighted-moving average to determine a forecast for the 8th week using weights of 1,2,and 3.Calculate the MAD for this forecast.What does the MAD indicate? Week Sales 1 25 2 30 3 27 4 31 5 27 6 29 7 30

Compare seasonal effects and cyclical effects.