Final Test Forecasting

Forecasts are always wrong and therefore

• should only be used when there are no accurate estimates.

• should be missing the expected value of the forecast and a measure of forecast error.

• should not include both the expected value of the forecast and a measure of forecast error.

• should include both the expected value of the forecast and a measure of forecast error.

Leaders in many supply chains have started moving toward collaborative forecasting to improve their ability to match supply and demand.

• True

• False

Most firms that employ forecasting do not maintain any estimates of forecast error.

• True

• False

Mature products with stable demand are usually the most difficult to forecast.

• True

• False

Forecasting methods that use historical demand to make a forecast are known as

• causal forecasting methods.

• simulation forecasting methods.

• time series forecasting methods.

• qualitative forecasting methods.

Long-term forecasts are usually less accurate than short-term forecasts because

• long-term forecasts have a larger standard deviation of error relative to the mean than short-term forecasts.

• short-term forecasts have a larger standard deviation of error relative to the mean than long-term forecasts.

• short-term forecasts have more standard deviation of error relative to the mean than long-term forecasts.

• long-term forecasts have a smaller standard deviation of error relative to the mean than short-term forecasts.

The basis for all strategic and planning decisions in a supply chain comes from

• profitability projections.

• production efficiency goals.

• sales targets.

• the forecast of demand.

The measure of forecast error where the amount of error of each forecast is squared and then an average is calculated is

• mean absolute percentage error (MAPE).

• mean squared error (MSE).

• the tracking signal.

• mean absolute deviation (MAD).

The basic trade-offs when creating an aggregate plan involve balancing the cost of capacity, the cost of inventory, and the cost of stockouts to maximize profitability.

• True

• False

The forecast of demand forms the basis for all strategic and planning decisions in a supply chain.

• True

• False