Question

Generally speaking, the further out the time horizon, the more accurate a data based forecast will be (relative to a forecast based on a qualitative method . "

True

False

Which of the following demand data exhibit(s) a strong and predictable seasonality pattern?

		Bread consumption over a month
		Electricity usage over a 24 hour period
		Stock prices over a year
		Number of people having access to a telephone land line over a year

"Two methods are used to predict how many customers will call in for help in the next four days. The first method predicts the numbers of callers to be 23, 5, 14, and 20 for the four respective days. The second method predicts 20, 13, 14, and 20 for the four respective days. The actual numbers of callers turn out to be 23, 10, 15, and 19. Which method has the bigger forecast bias (bias exists when average error is + or - ), No bias means average error is 0 "

		The first method
		The second method
		Both are biased
		Both are not biased

Kim s Nail Salon uses a 3 period weighted moving average method to forecast demand. She assigns a weight of 5 to the previous months demand, 3 to demand two months ago, and 2 to demand three months ago. If demand was 800 customers in April, 900 customers in May, 1,200 customers in June, and 2,000 customers in July, what should her forecast for August be?"

		"1,540"
		910
		"1,400"
		"1,210"

Answer 1

1st question

Correct answer is True

qualitative method is used for longer time horizon foecasts

2nd question

Correct answer is Electricity usage over a 24 hour period

3rd question

In First method, Errors in four respective days = (23-23),(10-5),(15-14),(19-20) = 0,5,1,-1

So, sum of errors = 0+5+1-1 = 5

In Second method, Errors in four respective days = (23-20),(10-13),(15-14),(19-20) = 3,-3,1,-1
So, sum of errors = 3-3+1-1 = 0

So, the first method has buggest forecast bias

4th question

Forcast for August = (5*2000+3*1200+2*900)/(5+3+2) = 1540 (Answer)