Chapter 3
Forecasting
True/False
1. Forecasting techniques generally assume an existing causal system that will continue to exist in the
future.
Answer: True
2. For new products in a strong growth mode, a low alpha will minimize forecast errors when using
exponential smoothing techniques.
Answer: False
3. Once accepted by managers, forecasts should be held firm regardless of new input since many plans
have been made using the original forecast.
Answer: False
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.
Answer: False
5. Forecasts help managers plan both the system itself and provide valuable information for using the
system.
Answer: True
6. Organizations that are capable of responding quickly to changing requirements can use a shorter
forecast horizon and therefore benefit from more accurate forecasts.
Answer: True
7. The purpose of the forecast should be established first so that the level of detail, amount of resources,
and accuracy level can be understood.
Answer: True
8. Forecasts based on time series (historical) data are referred to as associative forecasts.
Answer: True
9. Time series techniques involve identification of explanatory variables that can be used to predict future
demand.
Answer: False
10. A consumer survey is an easy and sure way to obtain accurate input from future customers since most
people enjoy participating in surveys.
, Answer: False
11. The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast.
Answer: True
12. Exponential smoothing adds a percentage (called alpha factor) of last period’s forecast to estimate
next period’s demand.
Answer: False
13. The shorter the forecast period, the more accurately the forecasts tend to track what actually happens.
Answer: True
14. Forecasting techniques that are based on time series data assume that future values of the series will
duplicate past values.
Answer: False
15. Trend adjusted exponential smoothing uses double smoothing to add twice the forecast error to last
periods actual.
Answer: False
16. Forecasts based on an average tend to exhibit less variability than the original data.
Answer: True
17. The naive approach to forecasting requires a linear trend line.
Answer: False
18. The naive forecast is limited in its application to series that reflect no trend or seasonality.
Answer: False
19. The naive forecast can serve as a quick and easy standard of comparison against which to judge the
cost and accuracy of other techniques.
Answer: True
20. A moving average forecast tends to be more responsive to changes in the data series when more data
points are included in the average.
Answer: False
21. In order to update a moving average forecast, the values of each data point in the average must be
known.
Answer: True
Forecasting
True/False
1. Forecasting techniques generally assume an existing causal system that will continue to exist in the
future.
Answer: True
2. For new products in a strong growth mode, a low alpha will minimize forecast errors when using
exponential smoothing techniques.
Answer: False
3. Once accepted by managers, forecasts should be held firm regardless of new input since many plans
have been made using the original forecast.
Answer: False
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.
Answer: False
5. Forecasts help managers plan both the system itself and provide valuable information for using the
system.
Answer: True
6. Organizations that are capable of responding quickly to changing requirements can use a shorter
forecast horizon and therefore benefit from more accurate forecasts.
Answer: True
7. The purpose of the forecast should be established first so that the level of detail, amount of resources,
and accuracy level can be understood.
Answer: True
8. Forecasts based on time series (historical) data are referred to as associative forecasts.
Answer: True
9. Time series techniques involve identification of explanatory variables that can be used to predict future
demand.
Answer: False
10. A consumer survey is an easy and sure way to obtain accurate input from future customers since most
people enjoy participating in surveys.
, Answer: False
11. The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast.
Answer: True
12. Exponential smoothing adds a percentage (called alpha factor) of last period’s forecast to estimate
next period’s demand.
Answer: False
13. The shorter the forecast period, the more accurately the forecasts tend to track what actually happens.
Answer: True
14. Forecasting techniques that are based on time series data assume that future values of the series will
duplicate past values.
Answer: False
15. Trend adjusted exponential smoothing uses double smoothing to add twice the forecast error to last
periods actual.
Answer: False
16. Forecasts based on an average tend to exhibit less variability than the original data.
Answer: True
17. The naive approach to forecasting requires a linear trend line.
Answer: False
18. The naive forecast is limited in its application to series that reflect no trend or seasonality.
Answer: False
19. The naive forecast can serve as a quick and easy standard of comparison against which to judge the
cost and accuracy of other techniques.
Answer: True
20. A moving average forecast tends to be more responsive to changes in the data series when more data
points are included in the average.
Answer: False
21. In order to update a moving average forecast, the values of each data point in the average must be
known.
Answer: True
