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Chapter 03 - Forecasting Chapter 03 Forecasting True / False Questions 1. Forecasting techniques generally assume an existing causal system that will continue to exist in the future. TRUE Difficulty: Medium TLO: 2 Taxonomy: Knowledge 2. For new products in a strong growth mode, a low alpha will minimize forecast errors when using exponential smoothing techniques. FALSE Difficulty: Medium TLO: 5 Taxonomy: Knowledge 3. Once accepted by managers, forecasts should be held firm regardless of new input since many plans have been made using the original forecast. FALSE AACSB: RT Difficulty: Easy TLO: 1 Taxonomy: Knowledge 3-1
Chapter 03 - Forecasting 4. Forecasts for groups of items tend to be less accurate than forecasts for individual items because forecasts for individual items don't include as many influencing factors. FALSE Difficulty: Medium TLO: 2 Taxonomy: Knowledge 5. Forecasts help managers plan both the system itself and provide valuable information for using the system. TRUE Difficulty: Easy TLO: 1 Taxonomy: Knowledge 6. Organizations that are capable of responding quickly to changing requirements can use a shorter forecast horizon and therefore benefit from more accurate forecasts. TRUE Difficulty: Medium TLO: 2 Taxonomy: Synthesis 7. When new products or services are introduced, focus forecasting models are an attractive option. FALSE Difficulty: Easy TLO: 8 Taxonomy: Knowledge 3-2
Chapter 03 - Forecasting 8. The purpose of the forecast should be established first so that the level of detail, amount of resources, and accuracy level can be understood. TRUE Difficulty: Medium TLO: 2 Taxonomy: Knowledge 9. Forecasts based on time series (historical) data are referred to as associative forecasts. TRUE Difficulty: Easy TLO: 4 Taxonomy: Knowledge 10. Time series techniques involve identification of explanatory variables that can be used to predict future demand. FALSE Difficulty: Hard TLO: 4 Taxonomy: Knowledge 11. A consumer survey is an easy and sure way to obtain accurate input from future customers since most people enjoy participating in surveys. FALSE AACSB: RT Difficulty: Easy TLO: 3 Taxonomy: Knowledge 3-3
12. The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast. TRUE Difficulty: Easy TLO: 3 Taxonomy: Knowledge 13. Exponential smoothing adds a percentage (called alpha) of last period's forecast to estimate next period's demand. FALSE Difficulty: Medium TLO: 5 Taxonomy: Knowledge 14. The shorter the forecast period, the more accurately the forecasts tend to track what actually happens. TRUE Difficulty: Easy TLO: 7 Taxonomy: Synthesis 15. Forecasting techniques that are based on time series data assume that future values of the series will duplicate past values. FALSE
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