TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) If the historical data on which the model is being built consist of weekly data, the forecasting period 1) would also be weekly.
2) In order for a time series to exhibit a seasonal component, the data must be measured in periods as 2) short or shorter than quarterly.
3) If a manager is planning for an expansion of the factory, a forecast model with a long-term 3) planning horizon would probably be used.
4) The time-series component that implies a long-term upward or downward pattern is called the 4) trend component.
5) Some stocks are referred to as cyclical stock because they tend to be in favor for several years and 5) then out of favor for several years. This is a correct use of the term cyclical.
6) To compare one value measured at one point in time with other values measured at different 6) points in time, index numbers must be used.
7) A time-series graph shows that monthly income data have decreased gradually over the past 5 7) years. Given this, if a linear trend model is used to forecast future monthly income, the sign on the regression slope coefficient will be negative.
8) You are given the following linear trend model: Ft = 345.60 - 200.5(t). The forecast for period 15 is 8) approximately -2,662.
9) You are given the following linear trend model: Ft = 345.60 - 200.5(t). This model implies that in 9) year 1, the dependent variable had a value of 145.1.
10) In measuring forecast errors, the MAD and the square root of the MSE will provide similar (but not 10) identical) values, in that both provide a measure of the "typical" amount of error in forecasts.
11) Forecast bias measures the average amount of error per forecast, so a positive value means that 11) forecasts tended to be too low.
12) It is possible to use linear regression analysis to develop a forecasting model for nonlinear data if 12) we can effectively transform the data.
13) A seasonal index is a statistic that is computed from time-series data to indicate the effect of the 13) seasonality in the time-series data.
14) In a time series with monthly sales data, a spring quarter seasonal index of 1.21 can be interpreted 14) to mean that sales tend to be 21 percent higher in the spring quarter when compared to the other quarters.
1 15) Recently, a manager for a major retailer computed the following seasonal indexes: 15)
Fall Qtr Winter Qtr Spring Qtr Summer Qtr
1.21 0.85 0.91
Note that the index for Summer Qtr is missing. However, it can be determined that the index for that period is approximately 1.03
16) When using the multiplicative time-series model to determine the seasonal indexes, the first step is 16) to isolate the seasonal and random components from the cyclical and trend components.
17) If the Durbin-Watson test leads you to reject the null hypothesis, then you are concluding that the 17) forecast errors are positively autocorrelated.
18) If you suspect that a nonlinear trend exists in your data, one way to deal with it in a trend-based 18) forecasting application is to transform the independent variable, for example by squaring the time measure or maybe taking the square-root of the time measure.
19) The purpose of deseasonalizing a time series is that a strong seasonal pattern may make it difficult 19) to see a trend in the time series.
20) If the Durbin-Watson d statistic has a value close to 2, there is reason to believe that there is no 20) autocorrelation between the forecast errors.
21) The reason for testing for the presence of autocorrelation in a regression-based trend forecasting 21) model is that one assumption of the regression analysis is that the residuals are not correlated.
22) In a single exponential smoothing model, one smoothing constant is used to weigh the historical 22) data, and the model is of primary value when the data do not exhibit trend or seasonal components.
23) If a time series contains substantial irregular movement, the smoothing constant for a single 23) exponential smoothing model that is close to 1.0 will result in forecasts that are not as smoothed out as those that would occur if a smaller smoothing constant was used.
24) In establishing a single exponential smoothing forecasting model, a starting point for the forecast 24) value for period 1 is required. One method for arriving at this starting point is to use the first data point as the forecast for that period. If we do that, then the first data point should be ignored when computing measures of forecast error.
25) In a double smoothing model, the second smoothing constant is introduced to account for the trend 25) in the data if one exists.
26) In a double smoothing model, large values for the two smoothing constants will result in greater 26) smoothing of the time series.
27) Prior to conducting double exponential smoothing a simple linear regression is conducted and the 27) ^ trend equation is y = 42 + 38.3t, so the smoothed constant process value should be C 0 = 38.3 and the smoothed trend value should be T0 = 42.
2 28) The owners of Hal's Cookie Company have collected sales data for the past 8 months. These data 28) are shown as follows:
After analyzing these data, if the company wishes to use double exponential smoothing with alpha = 0.20 and beta = 0.20, the starting values for the constant process and the trend process can be derived from a linear trend regression model by using the intercept and slope coefficient respectively.
3 30) Renton Industries makes replacement parts for the automobile industry. As part of the company's 30) capacity planning, it needs a long-range total demand forecast. The following information was generated based on 10 years of historical data on total number of parts sold each year.
Based on this information, the percent of variation in the number of parts sold that is explained by the linear trend model is approximately 90.9.
31) Renton Industries makes replacement parts for the automobile industry. As part of the company's 31) capacity planning, it needs a long-range total demand forecast. The following information was generated based on 10 years of historical data on total number of parts sold each year.
Based on this information we can conclude that the linear trend model explains a significant proportion of the variation in the number of parts sold, because the p-value is much smaller than any reasonable that we might use.
4 32) Renton Industries makes replacement parts for the automobile industry. As part of the company's 32) capacity planning, it needs a long-range total demand forecast. The following information was generated based on 10 years of historical data on total number of parts sold each year.
Based on this information, we can conclude that sales on average have been growing by more than 48 thousand annually.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
33) In a recent meeting, the marketing manager for a large hardware company stated that he needed to 33) have a forecast prepared for the next three months. The three-month period is called: A) the planning time. B) a business cycle. C) the forecasting period. D) the forecasting horizon.
34) In a recent meeting, the sales manager for a drug company stated that she needed to have a forecast 34) prepared for each week for the next six weeks. The week in this case is the: A) forecasting period. B) planning time. C) forecasting interval. D) forecasting horizon.
35) Which of the following time-series components can be identified when a company has 12 weeks of 35) data beginning January and extending through March? A) Seasonal component B) Random component C) Trend component D) Both B and C
36) Assume that the year 2000 is used as the index base period and that sales were 12 million in the 36) year 2000. If sales were 18 million in the year 2006, the simple index number for the year 2006 is: A) 0.666 B) 6 million C) 1.5 D) 150
37) A company has recorded 12 months of sales data for the past year and has found the linear trend 37) ^ equation is y = 286 + 64.9t. Based on this information, which of the following is the forecast for period 13? A) 350.8 B) 3718 C) 842.4 D) 1129.7
5 38) Assume that a time-series plot takes the form of that shown in the following graph: 38)
Given this plot, which of the following models would likely give the best fit? ^ ^ A) y = b0 + b1 t + b1 t2 + b3t3 + b4 t4 B) y = b0 b1 + b1t ^ ^ C) y = b0 + b1 t + b1 t2 D) y = b0 + b1 t + b1 t2 + b1t3
6 39) The following output is provided for a linear trend regression-based forecasting model based on 12 39) months of data:
Suppose that the actual sales for months 13-15 are: 720, 680, 800. Given this, which of the following is the forecast bias value for months 13-15? A) About -56.8 B) Approximately 233.2 C) Just under 80 D) Approximately 77.7
40) Suppose an economist has developed a model for forecasting annual consumption, y t, as function 40) of total labor income, x 1t, and total property income, x 2t based on 20 years on annual data. The following regression model has been developed: ^ y t= 7.81 + 0.91x 1t + 0.57x 2t with the standard error = 1.29 and the Durbin-Watson d statistic = 2.09. Using an alpha = .05, which of the following is the correct critical value for testing whether the residuals are autocorrelated? A) 1.10 and 1.54 B) 1.20 and 1.41 C) 1.08 and 1.53 D) Can't be determined without seeing the residuals.
41) If time-series data exhibit a seasonal pattern, which of the following approaches could be used to 41) compute season indexes? A) The Pearson product-moment approach B) The exponential smoothing technique C) The multiplicative model D) None of the above
7 42) The Boxer Company has been in business since 1998. The following sales data are recorded by 42) quarter for the years 2010-2012.
Quarter Sales Winter 10 50 Spring 10 70 Summer 10 100 Fall 10 60 Winter 11 60 Spring 11 70 Summer 11 120 Fall 11 80 Winter 12 70 Spring 12 90 Summer 12 140 Fall 12 100
The managers at the company wish to determine the seasonal indexes for each quarter during the year. The first step in the process is to remove the seasonal and random components. To do this, they will begin by computing a four period moving average. What is the four-period moving average based on Winter 99 - Fall 99? A) 55 B) 280 C) 60 D) 70
43) The Boxer Company has been in business since 1998. The following sales data are recorded by 43) quarter for the years 2010-2012.
Quarter Sales Winter 10 50 Spring 10 70 Summer 10 100 Fall 10 60 Winter 11 60 Spring 11 70 Summer 11 120 Fall 11 80 Winter 12 70 Spring 12 90 Summer 12 140 Fall 12 100
The managers at the company wish to determine the seasonal indexes for each quarter during the year. The first step in the process is to remove the seasonal and random components. To do this, they will begin by computing a four-period moving average. They then compute the centered moving average. What is the centered moving average for Spring '01? A) 11.50 B) 100 C) 97.5 D) 89.0
8 44) The Boxer Company has been in business since 1998. The following sales data are recorded by 44) quarter for the years 2010-2012.
Quarter Sales Winter 10 50 Spring 10 70 Summer 10 100 Fall 10 60 Winter 11 60 Spring 11 70 Summer 11 120 Fall 11 80 Winter 12 70 Spring 12 90 Summer 12 140 Fall 12 100
The managers at the company wish to determine the seasonal indexes for each quarter during the year. The first step in the process is to remove the seasonal and random components. To do this, they will begin by computing a four-period moving average. They then compute the centered moving average. What is the next step in applying the multiplicative model? A) Normalize the data B) Divide the centered moving average by the forecasted value C) Compute the ratio-to-moving average value D) Compute the grand mean
45) Which of the following forecasting methods allows the decision maker to weigh the past time series 45) differently to make the model more sensitive to more recent data? A) Linear trend regression model B) Deseasonalizing the time series C) Moving average model D) Exponential smoothing
9 46) The Wilson Company is interested in forecasting demand for its XG-667 product for quarter 13 46) based on 12 quarters of data. The following shows the data and the double exponential smoothing model results for periods 1-12 using alpha = 0.20 and beta = 0.40.
Based on this information, which of the following is the forecast for period 13? A) Approximately 1,174 B) Nearly 1,225 C) About 1,345 D) Just under 1,300
