Multiple Choice Questions
12) Mature products with stable demand
A) are usually easiest to forecast.
B) are usually hardest to forecast.
C) cannot be forecast.
D) do not need to be forecast.
E) none of the above
Answer: A
13) When either the supply of raw materials or the demand for the finished product is highly
variable, forecasting and the accompanying managerial decisions
A) are extremely simple.
B) are relatively straightforward.
C) are extremely difficult.
D) should not be attempted.
E) none of the above
Answer: C
15) One of the characteristics of forecasts is
A) aggregate forecasts are usually less accurate than disaggregate forecasts.
B) disaggregate forecasts are usually more accurate than aggregate forecasts.
C) short-term forecasts are usually less accurate than long-term forecasts.
D) long-term forecasts are usually less accurate than short-term forecasts.
E) none of the above
Answer: D
17) Forecasts are always wrong and therefore
A) should include both the expected value of the forecast and a measure of forecast error.
B) should not include both the expected value of the forecast and a measure of forecast error.
C) should only be used when there are no accurate estimates.
D) should be missing the expected value of the forecast and a measure of forecast error.
E) none of the above
Answer: A
19) Aggregate forecasts are usually more accurate than disaggregate forecasts because
A) aggregate forecasts tend to have a larger standard deviation of error relative to the mean.
B) aggregate forecasts tend to have a smaller standard deviation of error relative to the mean.
C) disaggregate forecasts tend to have a smaller standard deviation of error relative to the mean.
D) disaggregate forecasts tend to have less standard deviation of error relative to the mean.
E) none of the above
Answer: B
23) Forecasting methods that use historical demand to make a forecast are known as
A) qualitative forecasting methods.
B) time series forecasting methods.
C) causal forecasting methods.
D) simulation forecasting methods.
E) none of the above
Answer: B
25) Forecasting methods that imitate the consumer choices that give rise to demand to arrive at a
forecast are known as
A) qualitative forecasting methods.
B) time series forecasting methods.
C) causal forecasting methods.
D) simulation forecasting methods.
E) none of the above
Answer: D
27) Time series forecasting methods are most appropriate when
A) there is little historical data available.
B) the basic demand pattern varies significantly from one year to the next.
C) the basic demand pattern does not vary significantly from one year to the next.
D) experts have critical market intelligence.
E) forecasting demand several years into the future.
Answer: C
29) Which of the following is not a step to help an organization perform effective forecasting?
A) Understand the objective of forecasting.
B) Integrate demand planning and forecasting throughout the supply chain.
C) Understand and identify customer segments.
D) Identify and understand supplier requirements.
E) Determine the appropriate forecasting technique.
Answer: D
35) A static method of forecasting
A) assumes that the estimates of level, trend, and seasonality within the systematic component do
not vary as new demand is observed.
B) assumes that the estimates of level, trend, and seasonality within the systematic component
vary as new demand is observed.
C) the estimates of level, trend, and seasonality are updated after each demand observation.
D) All of the above are true.
E) None of the above are true.
Answer: A
37) The moving average forecast method is used when
A) demand has observable trend or seasonality.
B) demand has no observable trend or seasonality.
C) demand has observable trend and seasonality.
D) demand has no observable level or seasonality.
E) none of the above
Answer: B
39) The trend corrected exponential smoothing (Holt's Model) forecast method is appropriate
when
A) demand has observable trend or seasonality.
B) demand has no observable trend or seasonality.
C) demand has observable trend but no seasonality.
D) demand has no observable level or seasonality.
E) none of the above
Answer: C
41) The measure of forecast error where the absolute amount of error of each forecast is
averaged is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) mean absolute percentage error (MAPE).
D) bias.
E) the tracking signal.
Answer: B
45) ________ forecasting methods assume that the demand forecast is highly correlated with
certain factors in the environment (the state of the economy, interest rates, etc.).
A) Qualitative
B) Time-series
C) Causal
D) Simulation
Answer: C
