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# SC Test 2

18. Consider the demand data listed below. What is the 4-month moving average forecast for June?
Month Actual Demand
Jan. 10,000
Feb. 12,000
March 24,000
April 8,000
May 14,000

A) 14,000
B) Not enough information is given to answer the question. C) 14,500
D) 13,500
E) 15,333

C) 14,500

4. Suppose that you are using the simple mean to make a forecast. This period’s forecast was equal to 100 units, and it was based on 6 periods of demand. This period’s actual demand was 86 units. What is your forecast for next period?
A) 98
B) 100
C) 93
D) 86
E) Not enough information is given to answer the question.

A) 98

1. A causal research model is based on the assumption that
A) the independent variable is related to the dependent variable
B) there is a relationship between the time series and the dependent variable
C) the variable being forecast is related to other variables in the environment
D) there is a relationship between the time series and the independent variable
E) the information is contained in a time series of data

C) the variable being forecast is related to other variables in the environment

2. Which of the following is the least useful sales forecasting model to use when sales are increasing?
B) Simple mean
C) Exponential smoothing
D) W eighted moving average
E) Naïve

B) Simple mean

3. Suppose that you are using the naïve forecasting method with trend to forecast sales. If sales have been declining by 20% per week, and this week’s sales amounted to \$200, what would your forecast be for next week?
A) \$200
B) \$40 C) \$240 D) \$180 E) \$160

E) \$160

5. Suppose that you are using the four-period simple moving average method to forecast
sales, and sales have been decreasing by 10% every period. How will your forecasts perform?
A) Forecasts will be lower than actual.
B) Forecasts will be higher than actual.
C) Forecasts will equal actual.
D) Forecasts will be increasing.
E) Forecasts will be decreasing by 2.5% every period.

B) Forecasts will be higher than actual.

6. Suppose that you are using the four-period weighted moving average forecasting method to forecast sales and you know that sales will be increasing every period for the foreseeable future. What of the following would be the best set of weights to use (listed in order from the most recent period to four periods ago, respectively)?
A) 0.25, 0.25, 0.25, 0.25
B) 0.40, 0.30, 0.20, 0.10
C) 1.00, 0.00, 0.00, 0.00
D) 0.10, 0.20, 0.30, 0.40
E) 0.00, 0.00, 0.00, 1.00

C) 1.00, 0.00, 0.00, 0.00

The following sales figures show actual sales over the identified time period. What can be determined by comparing a simple mean forecast and a six month moving average forecast?
December 4000
January 5000
February 4000
March 4500
April 5500
May 5000

A) moving average develops a smoother forecast
B) 4.7, 5
C) 4.7, 4
D) 4,4
E) 4, 4.7

D) 4,4

8. In exponential smoothing, which of the following values for α would generate the most stable forecast?
A) 0.10
B) 0.25
C) 0.50
D) 0.75
E) 1.00

A) 0.10

9. What does the linear regression line do?
A) Minimizes sum of errors
B) Minimizes product of squared errors
C) Minimizes sum of squared errors
D) Minimizes product of errors
E) Minimizes sum of absolute value of errors

C) Minimizes sum of squared errors

10. In linear regression, an r2 of .984 implies what?
A) 98.4% of the variability of the independent variable is explained by the dependent
variable
B) 98.4% of the variability of the dependent variable is explained by the independent
variable
C) 1.6% of the variability of the independent variable is explained by the dependent
variable
D) 1.6% of the variability of the dependent variable is explained by the independent
variable
E) 99.2% of the variability of the dependent variable is explained by the independent
variable

B) 98.4% of the variability of the dependent variable is explained by the independent
variable

11. What value of the correlation coefficient implies that there is no relationship between the two variables of a linear regression model?
A) -1
B) 0
C) 0.5
D) 1
E) ∞

B) 0

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12. What is the statistic that measures the direction and strength of the linear relationship between two variables?
A) r2
B) Coefficient of variation
C) V ariance
D) Coefficient of kurtosis
E) Correlation coefficient

E) Correlation coefficient

13. Which of the following values of the correlation coefficient implies that the value of the dependent variable decreases as the value of the independent variable increases?
A) -0.2
B) 0
C) 0.2
D) 1
E) 0.5

A) -0.2

14. The following correlation coefficient values come from five different linear regression
models. Which model “fits” the data the best?
A) 0.99
B) 0.5
C) 0
D) -0.8
E) -1

E) -1

15. What is a tracking signal used for?
A) To identify trends in actual data
B) To identify seasonality in actual data
C) To identify the effect of business cycles on actual data
D) To compute the value of the smoothing constant
E) To identify forecast bias

E) To identify forecast bias

19. Which of the following would not be a consideration for selecting a forecasting software package?
A) How easy is the package to learn?
B) Is it possible to implement new methods?
C) Do you require repetitive forecasting?
D) Does the supplier support a local conference?
E) Is there any local support?

D) Does the supplier support a local conference?

16. Suppose that Jane’s company uses exponential smoothing to make forecasts. Further suppose that last period’s demand forecast was for 500 units and last period’s actual demand was 480 units. In addition, yesterday Jane found out that this period’s actual demand will be for 550 units. Jane’s company uses an α value of .20. Today, Jane’s
boss asked her to prepare a forecast for this period. What should that forecast be?
A) 504
B) 496
C) 510
D) 484
E) 550

C) 510

17. What is the mean absolute deviation and mean squared error of the following forecast

Day Sales Sales Forecast
24 37
31 41
27 46
29 47
25 50

A) 13, 157
B) 14, 321
C) 16, 312
D) 17, 316
E) 18, 321

D) 17, 316

20. ____________________ is a collaborative process between two trading partners that establishes formal guidelines for joint forecasting and planning.
A) Collaborative Planning Forecasting and Replenishment (CPFR)
B) Supply Chain Planning Forecasting and Replenishment (SCPFR)
C) Supply Chain Optimization (SCO)
D) Collaborative Creation of Guidelines (CCG)
E) Joint Planning and Forecasting (JPP)

A) Collaborative Planning Forecasting and Replenishment (CPFR)

21. Planalytics is a company that helps businesses use weather data to make their business plans.
A) True B) False

A) True

22. Executive opinion is a forecasting method designed to preserve anonymity among the forecasters.
A) True B) False

B) False

23. With the Delphi method, a group of managers meet and collectively generate a forecast. A) True
B) False

B) False

24. A cycle is typically the most difficult data pattern to predict. A) True
B) False

A) True

25. Suppose that you are using the three-period simple moving average method to forecast sales, and sales have been increasing by 10% every period. Then your forecasts will be lower than the actual sales.
A) True
B) False

A) True

26. Moving average forecasts with a larger number of observations are more responsive than those with a smaller number of observations.
A) True
B) False

B) False

27. Moving average forecasts with a smaller number of observations are more subject to random changes in the data than those with a larger number of observations.
A) True
B) False

A) True

28. Statistical packages such as SPSS, SAS, and Minitab, are types of forecasting software. A) True
B) False

A) True

29. Joe’s Equipment Distributors sells “Low and Loud” brand lawnmowers. Total demand in 2002 is expected to be 2000 units. Given the historical sales figures listed below, derive a forecast for each quarter in 2002.

1999 2000 2001
Fall 50 80 120
Winter 150 450 510
Spring 500 600 700
Summer 400 490 610

A) Fall = 104.5, Winter = 451, Spring = 790.5, Summer = 654
B) Fall = 83.3, Winter = 370, Spring = 600, Summer = 500
C) Fall = 54.6.5, Winter = 118.1, Spring = 2808.3, Summer =1941.9
D) Fall = 500, Winter = 500, Spring = 500, Summer = 500

A) Fall = 104.5, Winter = 451, Spring = 790.5, Summer = 654

30. Cover Me, Inc. sells umbrellas in three cities. Management assumes that annual rainfall is the primary determinant of umbrella sales, and it wants to generate a linear regression equation to estimate potential sales in other cities. what is the regression equation?
Rainfall X Sales Y
City A 36in 2300
City B 30in 2000
City C 12in 800

A) Y = 1.04X
B) Y=26.3+64.8X
C) Y = 50.00 + 63.46X
D) None of the above

C) Y = 50.00 + 63.46X

A causal research model is based on the assumption that
A) the independent variable is related to the dependent variable
B) there is a relationship between the time series and the dependent variable
C) the variable being forecast is related to other variables in the environment
D) there is a relationship between the time series and the independent variable
E) the information is contained in a time series of data

C

Which of the following is the least useful sales forecasting model to use when sales are
increasing?
B) Simple mean
C) Exponential smoothing
D) Weighted moving average
E) Naïve

B

Suppose that you are using the four-period simple moving average method to forecast
sales, and sales have been decreasing by 10% every period. How will your forecasts
perform?
A) Forecasts will be lower than actual.
B) Forecasts will be higher than actual.
C) Forecasts will equal actual.
D) Forecasts will be increasing.
E) Forecasts will be decreasing by 2.5% every period.

B

Suppose that you are using the four-period weighted moving average forecasting
method to forecast sales and you know that sales will be increasing every period for the
foreseeable future. What of the following would be the best set of weights to use
(listed in order from the most recent period to four periods ago, respectively)?
A) 0.25, 0.25, 0.25, 0.25
B) 0.40, 0.30, 0.20, 0.10
C) 1.00, 0.00, 0.00, 0.00
D) 0.10, 0.20, 0.30, 0.40
E) 0.00, 0.00, 0.00, 1.00

C

In exponential smoothing, which of the following values for α would generate the most
stable forecast?
A) 0.10
B) 0.25
C) 0.50
D) 0.75
E) 1.00

A

What does the linear regression line do?
A) Minimizes sum of errors
B) Minimizes product of squared errors
C) Minimizes sum of squared errors
D) Minimizes product of errors
E) Minimizes sum of absolute value of errors

C

In linear regression, an r^2
of .984 implies what?
A) 98.4% of the variability of the independent variable is explained by the dependent
variable
B) 98.4% of the variability of the dependent variable is explained by the independent
variable
C) 1.6% of the variability of the independent variable is explained by the dependent
variable
D) 1.6% of the variability of the dependent variable is explained by the independent
variable
E) 99.2% of the variability of the dependent variable is explained by the independent
variable

B

What value of the correlation coefficient implies that there is no relationship between
the two variables of a linear regression model?
A) -1
B) 0
C) 0.5
D) 1
E) ∞

B

What is the statistic that measures the direction and strength of the linear relationship
between two variables?
A) r^2
B) Coefficient of variation
C) Variance
D) Coefficient of kurtosis
E) Correlation coefficient

E

Which of the following values of the correlation coefficient implies that the value of the
dependent variable decreases as the value of the independent variable increases?
A) -0.2
B) 0
C) 0.2
D) 1
E) 0.5

A

The following correlation coefficient values come from five different linear regression
models. Which model “fits” the data the best?
A) 0.99
B) 0.5
C) 0
D) -0.8
E) -1

E

What is a tracking signal used for?
A) To identify trends in actual data
B) To identify seasonality in actual data
C) To identify the effect of business cycles on actual data
D) To compute the value of the smoothing constant
E) To identify forecast bias

E

Which of the following would not be a consideration for selecting a forecasting
software package?
A) How easy is the package to learn?
B) Is it possible to implement new methods?
C) Do you require repetitive forecasting?
D) Does the supplier support a local conference?
E) Is there any local support?

D

____________________ is a collaborative process between two trading partners that
establishes formal guidelines for joint forecasting and planning.
A) Collaborative Planning Forecasting and Replenishment (CPFR)
B) Supply Chain Planning Forecasting and Replenishment (SCPFR)
C) Supply Chain Optimization (SCO)
D) Collaborative Creation of Guidelines (CCG)
E) Joint Planning and Forecasting (JPP)

A

Planalytics is a company that helps businesses use weather data to make their business
plans.
A) True
B) False

A

Executive opinion is a forecasting method designed to preserve anonymity among the
forecasters.
A) True
B) False

B

With the Delphi method, a group of managers meet and collectively generate a forecast.
A) True
B) False

B

A cycle is typically the most difficult data pattern to predict.
A) True
B) False

A

Suppose that you are using the three-period simple moving average method to forecast
sales, and sales have been increasing by 10% every period. Then your forecasts will be
lower than the actual sales.
A) True
B) False

A

Moving average forecasts with a larger number of observations are more responsive
than those with a smaller number of observations.
A) True
B) False

B

Moving average forecasts with a smaller number of observations are more subject to
random changes in the data than those with a larger number of observations.
A) True
B) False

A

Statistical packages such as SPSS, SAS, and Minitab, are types of forecasting software.
A) True
B) False

A

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