MGSC 492 Actual Questions and Correct Answers
Q1
Inventory planning horizons: Long-term Medium-term Short-term
Answer: Long Term: More than 3 years - new product development and facilities
planning Medium term: 3 months to 3 years - aggregate demand planning, production
schedules, inventory, materials and component requirements. Short term: Less than 3
months - forecast throughput, inventory levels, supply synchronization.
Q2
Purpose of forecasts? What does it entail?
Answer: Helps with the inventory holding decisions Entails: What to stock, how much
to stock, what facilities are required
Q3
When are qualitative forecasting methods used? Brain-storming Scenario planning
Answer: Used when historical data is very limited or new products where there is no
data available. Brainstorming - a small number of senior management are in the
company Scenario planning - a group of experienced company employees and
customers agree on likely outcomes
Q4
Delphi method
Answer: Each is questioned separately and not allowed to collaborate
Q5
Panel Consensus
Answer: Group is allowed to meet and collaborate to form a agreed upon rate.
Q6
Expert opinion
Answer: One individual with past experience in the product line or market trends
forms the forecast
, Q7
Historical Analogy
Answer: Forecast of new product with follow line fitting of past product with similar
features - video game sequel.
Q8
Extrinsic (outside the entity) Causal methods
Answer: Line fitting of one or more independent variables to determine forecast-
example would be the number of births to the need for baby strollers, or number of
housing starts to amount of 2X4s that a lumber company would sell.
Q9
Intrinsic (data from inside the company) Naïve Moving average Weighted average Exponential
smoothing
Answer: Naïve: Use number last used without modifying - example using last March's
number (2019) for this March's(2020) Moving average: Going back the last three time
period and averaging for the new forecast - The more the number of periods are
averaged, the smoother the line of demand Weighted average: Average the last
several time periods weighing the most recent the highest. Exponential Smoothing:
The forecast is increased or decreased each period by an alpha factor or percentage
Q10
Time Series Models Trends Seasonal fluctuation Random fluctuation
Answer: Trends: Over several weeks, month or years. - can be a straight line, up or
down sloping Seasonal fluctuation: Roughly same each year will have periods that are
always high like summer for ice cream and soda consumption, and corresponding lows
like winter for ice cream and soda consumption Random fluctuation: Can occur
anytime
Q11
Key implications for logistics and particularly for inventory include Importance... Danger of
overstocking... Danger of loosing... Need for... Care not... Avoiding...
Answer: Importance of stock availability at the introductory stage Danger of
overstocking if a product doesn't take off Danger of loosing business if a product is
understocked at the early stages. Need for cost effective logistics and inventory levels
at the growth stage. Care not to overstock in the maturity stage due to competitive
and substitute products competing in the market. Avoiding obsolescence costs by
minimizing stock in the decline phase.
Q1
Inventory planning horizons: Long-term Medium-term Short-term
Answer: Long Term: More than 3 years - new product development and facilities
planning Medium term: 3 months to 3 years - aggregate demand planning, production
schedules, inventory, materials and component requirements. Short term: Less than 3
months - forecast throughput, inventory levels, supply synchronization.
Q2
Purpose of forecasts? What does it entail?
Answer: Helps with the inventory holding decisions Entails: What to stock, how much
to stock, what facilities are required
Q3
When are qualitative forecasting methods used? Brain-storming Scenario planning
Answer: Used when historical data is very limited or new products where there is no
data available. Brainstorming - a small number of senior management are in the
company Scenario planning - a group of experienced company employees and
customers agree on likely outcomes
Q4
Delphi method
Answer: Each is questioned separately and not allowed to collaborate
Q5
Panel Consensus
Answer: Group is allowed to meet and collaborate to form a agreed upon rate.
Q6
Expert opinion
Answer: One individual with past experience in the product line or market trends
forms the forecast
, Q7
Historical Analogy
Answer: Forecast of new product with follow line fitting of past product with similar
features - video game sequel.
Q8
Extrinsic (outside the entity) Causal methods
Answer: Line fitting of one or more independent variables to determine forecast-
example would be the number of births to the need for baby strollers, or number of
housing starts to amount of 2X4s that a lumber company would sell.
Q9
Intrinsic (data from inside the company) Naïve Moving average Weighted average Exponential
smoothing
Answer: Naïve: Use number last used without modifying - example using last March's
number (2019) for this March's(2020) Moving average: Going back the last three time
period and averaging for the new forecast - The more the number of periods are
averaged, the smoother the line of demand Weighted average: Average the last
several time periods weighing the most recent the highest. Exponential Smoothing:
The forecast is increased or decreased each period by an alpha factor or percentage
Q10
Time Series Models Trends Seasonal fluctuation Random fluctuation
Answer: Trends: Over several weeks, month or years. - can be a straight line, up or
down sloping Seasonal fluctuation: Roughly same each year will have periods that are
always high like summer for ice cream and soda consumption, and corresponding lows
like winter for ice cream and soda consumption Random fluctuation: Can occur
anytime
Q11
Key implications for logistics and particularly for inventory include Importance... Danger of
overstocking... Danger of loosing... Need for... Care not... Avoiding...
Answer: Importance of stock availability at the introductory stage Danger of
overstocking if a product doesn't take off Danger of loosing business if a product is
understocked at the early stages. Need for cost effective logistics and inventory levels
at the growth stage. Care not to overstock in the maturity stage due to competitive
and substitute products competing in the market. Avoiding obsolescence costs by
minimizing stock in the decline phase.
