Sample of Sales Forecast by iqc89390

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									Sample Exam Questions – Forecasting

    1. Simple exponential smoothing is being used to forecast demand. The previous forecast
       of 66 turned out to be four units less than actual demand. The next forecast is 66.6,
       implying a smoothing constant, alpha, equal to:
       A) .01
       B) .10
       C) .15
       D) .20
       E) .60

    2. A manager uses the following equation to predict monthly receipts: Yt = 40,000 + 150t.
       What is the forecast for July if t = 0 in April of this year?
       A) 40,450
       B) 40,600
       C) 42,100
       D) 42,250
       E) 42,400

    3. Given an actual demand of 59, a previous forecast of 64, and an alpha of .3, what would
       the forecast for the next period be using simple exponential smoothing?
       A) 36.9
       B) 57.5
       C) 60.5
       D) 62.5
       E) 65.5

    4. The two general approaches to forecasting are:
       A) mathematical and statistical
       B) qualitative and quantitative
       C) judgmental and qualitative
       D) historical and associative
       E) precise and approximation

    5. Which of the following possible values of alpha would cause exponential smoothing to
       respond the most slowly to sudden changes in forecast errors?
       A) .01
       B) .10
       C) .20
       D) .50
       E) ..90
Sample Exam Questions – Forecasting

    6. A forecast based on the previous forecast plus a percentage of the forecast error is:
       A) a naive forecast
       B) a simple moving average forecast
       C) a centered moving average forecast
       D) an exponentially smoothed forecast
       E) an associative forecast

    7. Given forecast errors of 5, 0, -4, and 3, what is the mean squared error?
       A) 7.07
       B) 16.67
       C) 12.5
       D) 2.0
       E) 1.0

    8. Given forecast errors of 5, 0, -4, and 3, what is the mean absolute deviation?
       A) 4
       B) 3
       C) 2.5
       D) 2
       E) 1

    9. Using the latest observation in a sequence of data to forecast the next period is:
       A) a moving average forecast
       B) a naive forecast
       C) an exponentially smoothed forecast
       D) an associative forecast
       E) regression analysis

   10. Which of the following would be an advantage of using a sales force composite to
       develop a demand forecast?
       A) The sales staff is least affected by changing customer needs.
       B) The sales force can easily distinguish between customer desires and probable
       C) The sales staff is often aware of customers' future plans.
       D) Salespeople are least likely to be influenced by recent events.
       E) Salespeople are least likely to be biased by sales quotas.
Sample Exam Questions – Forecasting

     11. In order to increase the responsiveness of a forecast made using the moving average
         technique, the number of data points in the average should be:
         A) decreased
         B) increased
         C) multiplied by a larger alpha
         D) multiplied by a smaller alpha
         E) none of the above

     12. A manager is using the equation below to forecast quarterly demand for a product:

           Yt = 6,000 + 80t where t = 0 at Q2 of last year
           Quarter relatives are Q1 = .6, Q2 = .9, Q3 = 1.3, and Q4 = 1.2.
           What forecasts are appropriate for the last quarter of this year and the first quarter of
           next year?

Answer Key
      1.   C
      2.   A
      3.   D
      4.   B
      5.   A
      6.   D
      7.   C
      8.   B
      9.   B
     10.   C
     11.   A
                   t = 6 for Q4 this year, and t = 7 for Q1 next year.

                   t    Trend [Yt]      Qtr.Rel.        Forecast
                   6    6480            1.2             7776
                   7    6560            .6              3936

1.     The percent of variation in the dependent variable that is explained by the regression
       equation is measured by the
       a. mean absolute deviation
       b. slope
       c. coefficient of determination
       d. correlation coefficient
       e. intercept
Sample Exam Questions – Forecasting

2.        The degree or strength of a linear relationship is shown by the
          a. alpha
          b. mean
          c. mean absolute deviation
          d. correlation coefficient
          e. RSFE

3.        The three major types of forecasts used by business organizations are
          a. strategic, tactical, and operational
          b. economic, technological, and demand
          c. exponential smoothing, Delphi, and regression
          d. causal, time-series, and seasonal
          e. departmental, organizational, and territorial

4.        Which of the following is not a step in the forecasting process?
          a. determine the use of the forecast
          b. eliminate any assumptions
          c. determine the time horizon
          d. select a forecasting model(s)
          e. validate and implement the results


     1.    c
     2.    d
     3.    b
     4.    b

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