Business Forecasting - True and False

File: ch12, Chapter 12: Forecasting

True/False

1. Forecasts based on mathematical formulas are referred to as qualitative forecasts.

Ans: False

Difficulty: Easy

Learning Objective: LO 1

1. Because of globalization of markets, managers are finding it increasingly more difficult to create accurate demand forecasts.

Ans: True

Difficulty: Moderate

Learning Objective: LO 1

1. Forecasting customer demand is often a key to providing good quality service.

Ans: True

Difficulty: Easy

Learning Objective: LO 1

1. One way to deal with the bullwhip effect is to develop and share the forecasts with other supply chain members.

Ans: True

Difficulty: Easy

Learning Objective: LO 1

1. Qualitative forecasts use mathematical techniques and statistical formulas.  

Ans: False

Difficulty: Moderate

Learning Objective: LO 1

1. In today’s competitive environment, effective supply chain management requires absolute demand forecasts.

Ans: False

Difficulty: Moderate

Learning Objective: LO 1

1. Sharing demand forecasts with supply chain members has resulted in an increased bullwhip effect.

Ans: False

Difficulty: Moderate

Learning Objective: LO 1

1. Because of advances in technology, many service industries no longer require accurate forecasts to provide high quality service.

Ans: False

Difficulty: Moderate

Learning Objective: LO 1

1. The type of forecasting method used depends entirely on whether the supply chain is continuous replenishment or not.

Ans: False

Difficulty: Moderate

Learning Objective: LO 1

1. Continuous replenishment systems rely heavily on extremely accurate long-term forecasts.

Ans: False

Difficulty: Easy

Learning Objective: LO 1

1. The type of forecasting method selected depends on time frame, demand behavior and causes of behavior.

Ans: True

Difficulty: Hard

Learning Objective: LO 2

1. A gradual, long-term up or down movement of demand over time is referred to as a trend.

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. A seasonal pattern is an oscillating movement in demand that occurs periodically over the short-run and is repetitive.  

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. Short-midrange forecasts tend to use quantitative models that forecast demand based on historical demand.

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. Long-range quantitative forecasts are used to determine future demand for new products, markets, and customers.

Ans: False

Difficulty: Moderate

Learning Objective: LO 2

1. The trend toward continuous replenishment in supply chain design has shifted the need for accurate forecasts from long-term to short-term.

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. The type of forecasting method selected depends on time frame, demand behavior, and causes of behavior.

Ans: True

Difficulty: Hard

Learning Objective: LO 2

1. Because of heightened competition resulting from globalization most companies find little strategic value in long-range forecasts.

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. Movements in demand that do not follow a given pattern are referred to as random variations.  

Ans: True

Difficulty: Easy

Learning Objective: LO 2

1. Many companies are shifting from long-term to short-term forecasts for strategic planning.

Ans: False

Difficulty: Moderate

Learning Objective: LO 2

1. The demand behavior for skis is considered cyclical.

Ans: False

Difficulty: Moderate

Learning Objective: LO 2

1. The long-term strategic planning process is dependent upon qualitative forecasting methods.

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. The Delphi method generates forecasts based on informed judgments and opinions from knowledgeable individuals.

Ans: True

Difficulty: Moderate

Learning Objective: LO 2

1. The most common type of forecasting method for long-term strategic planning is based on quantitative modeling

Ans: False

Difficulty: Moderate

Learning Objective: LO 2

1. Time series methods use historical data to predict future demand.

Ans: True

Difficulty: Moderate

Learning Objective: LO 3

1. One reason time series methods are popular for forecasting is that they are relatively easy to use and understand.

Ans: True

Difficulty: Moderate

Learning Objective: LO 3

1. Exponential smoothing is an averaging method for forecasting that reacts more strongly to recent changes in demand.

Ans: True

Difficulty: Moderate

Feedback: Times Series Methods

1. Time series methods assume that demand patterns in the past are a good predictor of demand in the future.

Ans: True

Difficulty: Moderate

Learning Objective: LO 3

1. The moving average method is used for creating forecasts when there is no variation in demand.

Ans: False