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Fundamentals of Operations Management, 4/e

Mark M. Davis, Bentley College
Nicholas J. Aquilano, University of Arizona
Richard B. Chase, USC, School of Business

Forecasting

Multiple Choice Quiz


1	When using moving averages and a trend exits, the forecast will lag behind the actual.
		A)	True
		B)	False


2	In regression analysis, the least squares method models uses one dependent and one or more independent variables.
		A)	True
		B)	False


3	Cyclical factors are not difficult to determine because the time between peaks and troughs is known.
		A)	True
		B)	False


4	The exponential smoothing constant alpha is a value between -1 to 1.
		A)	True
		B)	False


5	Which method of forecasting is the most used?
		A)	Regression analysis
		B)	Adaptive forecasting
		C)	Weighted moving average
		D)	Exponential smoothing


6	The moving average in forecasting is useful because it:
		A)	Eliminates the trend
		B)	Smoothes the random fluctuations
		C)	Counteracts the seasonal variations
		D)	Approximates the period average


7	Changing an alpha value in single exponential smoothing from .2 to .5 would make:
		A)	Forecasts more dependent on most recent actual
		B)	No difference
		C)	Forecasts slower to respond to most recent actual
		D)	The equations invalid


8	Which of the following influences on the sales of a product is the most difficult to forecast?
		A)	Seasonal
		B)	Autocorrelation
		C)	Trend
		D)	Nonlinear trend
		E)	cyclical


9	If the running sum of the forecast errors is 4 and the MAD is 24 for model, then which of the following statements is correct?
		A)	The tracking signal equals 1/6
		B)	The forecast model has bias in it
		C)	The forecast model might have had a large one-time error
		D)	The forecast model is out of control


10	Compute the expected number of the units sold in January of 1985 assuming the trend equation: T = 164.0 + 3 (X), with origin at July 1974, the X unit is one month and the T variable is "average monthly sales", and the seasonal index for January is 1.10. (Origin means X=1 in July 1974). Estimated sales for January of 1985 are:
		A)	600
		B)	563
		C)	500
		D)	399
		E)	200


11	A company has computed a seasonal index for its monthly sales. Which of the following statements about the index is not correct?
		A)	The sum of the twelve index numbers should be 1,200.
		B)	An index of .80 for July indicates that July sales are 20% lower than the average monthly sales.
		C)	An index of 1.25 for January indicates that January sales are 25% above the average sales.
		D)	The average index for all months in a year should equal 1.00.
		E)	When an index equals .9, the deseasonalized sales will be lower than actual sales.


12	The coefficient of determination measures which of the following (choose the most correct)?
		A)	The cause and effect between two variables.
		B)	The variation in the dependent variable "explained by" a variation in the independent variable.
		C)	How much the independent variable causes of the dependent variable.
		D)	The degree of causality.
		E)	The degree of reliability of the relationship.

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