Question

Which of the following statements is FALSE?

Select one:

a. Long-term forecasts tend to be less accurate than the short-term forecasts.

b. The smaller the number of periods ("n") used in the simple moving average forecasting method leads to a more sensitive forecast.

c. The larger “alpha” value of a simple exponential smoothing leads to a “more responsive” forecast.

d. Forecasts of suppliers tend to be less accurate than the forecasts of retailers in a supply chain.

e. Forecasts of individual products tend to be less accurate than the forecasts of product families.

Answer 1

Answer: Option d

Rationale: The accuracy of the forecasts of suppliers and retailers would depend on the methods they use but cannot be conclusively said that one is better than the other.

Options a, b, c, and e are true

• a is true because the long term forecasts have a higher deviation of error
• b is true because in simple moving average a responsive forecast depends on the number of periods
• c is true because a lower alpha value does not create a responsive forecast
• e is true because the error in individual products cancels the other errors resulting in less accuracy.