MGT 301-FINAL EXAM ACCURATE STUDY GUIDE
Forecasting - Answers - Provides an estimate of future demand
*GOAL*: minimize forecast error and match supply and demand
Goals of forecasting - Answers - Identify factors that influence demand
Improved forecasts benefits all trading partners with: lower inventories, reduced stock
outs, smoother production plans, reduced costs, improved customer service
Deciding what to forecast - Answers - Level of aggregation
Units of measure
Choosing the type of forecasting technique - Answers - Qualitative (judgment methods)
Time-series analysis
Trend projecting using regression
Multiplicative seasonal method
Causual methods
Time-Series Analysis - Answers - Trend variations: either increasing or decreasing
Cyclical variations: wavelike movements that are longer than a year
Seasonal variations: show peaks and valleys that repeat over a consistent interval such
as hours, days, weeks, months, or seasons
Irregular variations: Outliers
Random variations: due to unexpected or unpredictable events
Qualitative methods - Answers - Used when data are limited, unavailable, or not
currently relevant. this forecast depends on skill of forecaster and available information
Four models: Jury of executive opinion, delphi method, sales force composite,
consumer survey
Quantitative Methods - Answers - Time series forecasting: historical data is used to
predict future demand, assumes that the future is an extension of the past
Trend projection (using regression analysis)
Associative forecasting (cause and effect)-->regression analysis, one or more factors
predict future demand
Naive Forecasting Model - Answers - Last period's actual demand is used as this
period's forecast
F(t+1)-At
F5=A4
If Actual 4=8000, forecast 5=8000
Simple moving average forecasting model - Answers - uses historical data to generate a
forecast; works well when demand is fairly stable
, Period of moving average will be given
F5=(A1+A2+A3+A4)/n
F5= (1600+2200+2000+1600)/4
F5=1850
F9=(A5+A6+A7+A8)/n
Weighted Moving Average forecasting model - Answers - Based on an n-period
weighted moving average
Weight Assignments will be given
F5=A1Weight1+A2W2+A3W3+A4W4
F5= .1(1600)+.2(2200)+.3(2000)+.4(1600)=1840F9= A5W5-->A8W8
Exponential smoothing forecasting model - Answers - a weighted moving average in
which the forecast for the next period's demand is the current period's forecast adjusted
by a fraction of the difference wetween the current period's actual demand and its
forecast. *Only two data points are needed.*
Smoothing factor (a) is given: could be .3
F3=F2+a(A2-F2)
Collaborative planning, forecasting and replenishment (CPFR) - Answers - A nine-step
process for SC integration that allows a supplier and customers to collaborate on
forecasting by using the internet
Combines intelligence of multiple trading partners in planning & fulfillment of customer
demands
Benefits of CPFR - Answers - Real value from sharing forecasts among firms rather
than algorithms from single
Eliminates inventory shifting among partners
Provides SC with abundant benefits but requires fundamental change in buyer & seller
collaboration
Theory of Constraints
Capacity - Answers - The rate of output from an operations management system
A variable in the long term
A constraint in the short term
Must be managed because it is a major determinant of cost and customer service
*Maximum average rate of output of a process or system*
Constraint - Answers - any factor that limits process or system performance and
restricts its output
Bottleneck - Answers - constrained resource where demand on it exceeds capacity.
Typically the bottleneck will determine the system capacity (characterized by long lines
or lots of inventory ahead of bottleneck)
Forecasting - Answers - Provides an estimate of future demand
*GOAL*: minimize forecast error and match supply and demand
Goals of forecasting - Answers - Identify factors that influence demand
Improved forecasts benefits all trading partners with: lower inventories, reduced stock
outs, smoother production plans, reduced costs, improved customer service
Deciding what to forecast - Answers - Level of aggregation
Units of measure
Choosing the type of forecasting technique - Answers - Qualitative (judgment methods)
Time-series analysis
Trend projecting using regression
Multiplicative seasonal method
Causual methods
Time-Series Analysis - Answers - Trend variations: either increasing or decreasing
Cyclical variations: wavelike movements that are longer than a year
Seasonal variations: show peaks and valleys that repeat over a consistent interval such
as hours, days, weeks, months, or seasons
Irregular variations: Outliers
Random variations: due to unexpected or unpredictable events
Qualitative methods - Answers - Used when data are limited, unavailable, or not
currently relevant. this forecast depends on skill of forecaster and available information
Four models: Jury of executive opinion, delphi method, sales force composite,
consumer survey
Quantitative Methods - Answers - Time series forecasting: historical data is used to
predict future demand, assumes that the future is an extension of the past
Trend projection (using regression analysis)
Associative forecasting (cause and effect)-->regression analysis, one or more factors
predict future demand
Naive Forecasting Model - Answers - Last period's actual demand is used as this
period's forecast
F(t+1)-At
F5=A4
If Actual 4=8000, forecast 5=8000
Simple moving average forecasting model - Answers - uses historical data to generate a
forecast; works well when demand is fairly stable
, Period of moving average will be given
F5=(A1+A2+A3+A4)/n
F5= (1600+2200+2000+1600)/4
F5=1850
F9=(A5+A6+A7+A8)/n
Weighted Moving Average forecasting model - Answers - Based on an n-period
weighted moving average
Weight Assignments will be given
F5=A1Weight1+A2W2+A3W3+A4W4
F5= .1(1600)+.2(2200)+.3(2000)+.4(1600)=1840F9= A5W5-->A8W8
Exponential smoothing forecasting model - Answers - a weighted moving average in
which the forecast for the next period's demand is the current period's forecast adjusted
by a fraction of the difference wetween the current period's actual demand and its
forecast. *Only two data points are needed.*
Smoothing factor (a) is given: could be .3
F3=F2+a(A2-F2)
Collaborative planning, forecasting and replenishment (CPFR) - Answers - A nine-step
process for SC integration that allows a supplier and customers to collaborate on
forecasting by using the internet
Combines intelligence of multiple trading partners in planning & fulfillment of customer
demands
Benefits of CPFR - Answers - Real value from sharing forecasts among firms rather
than algorithms from single
Eliminates inventory shifting among partners
Provides SC with abundant benefits but requires fundamental change in buyer & seller
collaboration
Theory of Constraints
Capacity - Answers - The rate of output from an operations management system
A variable in the long term
A constraint in the short term
Must be managed because it is a major determinant of cost and customer service
*Maximum average rate of output of a process or system*
Constraint - Answers - any factor that limits process or system performance and
restricts its output
Bottleneck - Answers - constrained resource where demand on it exceeds capacity.
Typically the bottleneck will determine the system capacity (characterized by long lines
or lots of inventory ahead of bottleneck)
