question

Judgment methods may be the only practical way to make a forecast when

answer

there is no historical data due to a new product introduction

**Explanation:** The judgment methods may be the only practical way to make a forecast when the data are too limited or too scattered to be of any use in making a statistical forecast. In this case, the forecaster must use his or her experience and knowledge to come up with an estimate of what will happen in the future.

question

Theâ€‹ _________ of forecasting is a process of gaining consensus from a group of experts.

answer

delphi method

**Explanation:** The process of forecasting is a process of gaining consensus from a group of experts. This process is used to generate a forecast for a company or organization. The process typically involves the collection of data from a variety of sources, the development of a forecasting model, and the use of statistical techniques to generate a forecast.

question

A forecast with a large cumulative sum of forecast errorsâ€‹ (CFE) indicates

answer

consistent forecasting mistakes - the forecast is always too high or too low

**Explanation:** A forecast with a large cumulative sum of forecast errors (CFE) indicates that the forecast is not very accurate. The CFE is the sum of the forecast errors for each period in a time series. A large CFE means that the forecast is not very accurate.

question

Mean absolute deviation can be negative

answer

FALSE

**Explanation:** Mean absolute deviation (MAD) is a measure of variability which is computed as the average of the absolute values of the deviations of the data points from their mean. Since the deviations are always either positive or negative, the MAD will be negative if the sum of the deviations is negative.

question

Assume that a timeminusâˆ’series forecast is generated for future demand and subsequently it is observed that the forecast method did not accurately predict the actual demand.â€‹ Specifically, the forecast errors were found toâ€‹ be:
Mean absolute percent errorâ€‹ = 10%
Cumulative sum of forecast errorsâ€‹ = 0
Which one of the statements concerning this forecast isâ€‹ TRUE?

answer

the forecast has no bias but has a positive standard deviation of errors

**Explanation:** The forecast method did not accurately predict the actual demand. The forecast errors were found to be:Mean absolute percent error = 10%Cumulative sum of forecast errors = 0This means that, on average, the forecast was off by 10%. Additionally, the cumulative sum of the forecast errors was 0, which means that, on average, the forecast was neither consistently overestimating nor underestimating demand.

question

Managers that use data in period t as the forecast in period t+1 are implementing which of the following forecast methods?

answer

Naive forecasting

**Explanation:** This is an example of the naive forecast method, which simply uses the data from the current period as the forecast for the next period. This is not a very accurate method, but it is simple to implement.

question

Judgment methods of forecasting should never be used with quantitative forecasting methods.

answer

FALSE

**Explanation:** Judgment methods of forecasting are those that involve using the opinion of experts to make predictions about the future. This could include things like surveys, interviews, and focus groups. Quantitative forecasting methods are those that use historical data and statistical analysis to make predictions.The reason judgment methods should never be used with quantitative forecasting methods is because they are two completely different approaches. Judgment methods are subjective and based on opinions, while quantitative methods are objective and based on data. Using both methods together would not give you an accurate forecast.

question

Cumulative sum of forecast errors are always positive.

answer

FALSE

**Explanation:** This is because the forecast error is the difference between the actual value and the forecasted value. The cumulative sum of the forecast errors will be positive if the forecasted values are less than the actual values.

question

Forecast error is found by subtracting the forecast from the actual demand for a given period.

answer

TRUE

**Explanation:** The forecast error is the difference between the forecast demand and the actual demand for a given period. This error can be used to improve future forecasting accuracy.

question

A manager uses data on demand at time â€‹t-1 but not at time t to predict the demand at time â€‹t+1. Which of the following best describes this type of forecasting method.

answer

weighted moving average

**Explanation:** This forecasting method is called a univariate time series model. This type of model is based on the assumption that the demand at time t+1 can be predicted using only the data on demand at time t-1.