Notes and Quiz on Forecasting
Chapter
FORECASTING
Discussion Questions
1. Qualitative models incorporate subjective factors into the forecasting model. Qualitative models are useful when subjective factors are important. When quantitative data are difficult to obtain, qualitative models may be appropriate.
2. Approaches are qualitative and quantitative. Qualitative is relatively subjective; quantitative uses numeric models.
3. Short-range (under 3 months), medium-range (3 months to
3 years), and long-range (over 3 years).
4. The steps that should be used to develop a forecasting system are: (a) Determine the purpose and use of the forecast (b) Select the item or quantities that are to be forecasted (c) Determine the time horizon of the forecast (d) Select the type of forecasting model to be used (e) Gather the necessary data (f) Validate the forecasting model (g) Make the forecast (h) Implement and evaluate the results
5. Any three of: sales planning, production planning and budgeting, cash budgeting, analyzing various operating plans.
6. There is no mechanism for growth in these models; they are built exclusively from historical demand values. Such methods will always lag trends.
7. Exponential smoothing is a weighted moving average where all previous values are weighted with a set of weights that decline exponentially.
8. MAD, MSE, and MAPE are common measures of forecast accuracy. To find the more accurate forecasting model, forecast with each tool for several periods where the demand outcome is known, and calculate MSE, MAPE, or MAD for each. The smaller error indicates the better forecast.
9. The Delphi technique involves: (a) Assembling a group of experts in such a manner as to preclude direct communication between identifiable members of the group (b) Assembling the responses of each expert to the questions or problems of interest (c) Summarizing these responses (d) Providing each expert with the summary of all responses
FORECASTING
Discussion Questions
1. Qualitative models incorporate subjective factors into the forecasting model. Qualitative models are useful when subjective factors are important. When quantitative data are difficult to obtain, qualitative models may be appropriate.
2. Approaches are qualitative and quantitative. Qualitative is relatively subjective; quantitative uses numeric models.
3. Short-range (under 3 months), medium-range (3 months to
3 years), and long-range (over 3 years).
4. The steps that should be used to develop a forecasting system are: (a) Determine the purpose and use of the forecast (b) Select the item or quantities that are to be forecasted (c) Determine the time horizon of the forecast (d) Select the type of forecasting model to be used (e) Gather the necessary data (f) Validate the forecasting model (g) Make the forecast (h) Implement and evaluate the results
5. Any three of: sales planning, production planning and budgeting, cash budgeting, analyzing various operating plans.
6. There is no mechanism for growth in these models; they are built exclusively from historical demand values. Such methods will always lag trends.
7. Exponential smoothing is a weighted moving average where all previous values are weighted with a set of weights that decline exponentially.
8. MAD, MSE, and MAPE are common measures of forecast accuracy. To find the more accurate forecasting model, forecast with each tool for several periods where the demand outcome is known, and calculate MSE, MAPE, or MAD for each. The smaller error indicates the better forecast.
9. The Delphi technique involves: (a) Assembling a group of experts in such a manner as to preclude direct communication between identifiable members of the group (b) Assembling the responses of each expert to the questions or problems of interest (c) Summarizing these responses (d) Providing each expert with the summary of all responses