III Self-Evaluation

a) Quiz

1. Which of the following forecasting techniques generates trend forecasts?

(a) Delphi method
(b)
Moving averages
(c)
Single exponential smoothing
(d)
None of the above

2. For this set of errors: -1, -4, 0, +2, +3, MAD is:
(a) 1.0
(b)
1.6
(c) 2.0*
(d)
2.5
3. Which probability distribution is used most extensively in dealing with forecasting
errors?
(a) Normal*
(b) Poisson
(c) Exponential
(d) Beta

4. The cumulative forecast error is important for determining the:

(a) Mean squared error.
(b) Bias in forecast error.*
(c) Mean absolute deviation.
(d) Control limits
5. When we use exponential smoothing for forecasting, the alpha value (smoothing
constant) that would give the greatest weight to the current accruals would be:
(a) 0
(b)
0.01
(c) 0.10
(d)
0.30*

6. Simple exponential smoothing is being used to forecast demand. The previous

forecast of 66 turned out to be six units less than actual demand. The next
forecast is 66.9, implying a smoothing constant, alpha, equal to:
(a) 0.01
(b) 0.15*
(c)
0.10
(d)
0.20
7. The demand for an item on Tuesday was 80 units, on Wednesday it was 82
units, and on Thursday it was 78 units. A forecast for Friday based on 2-period
moving average would be:
(a) 78
 (b)
80*
(c)
84
(d) Can't tell from the data given

8. All of the following will increase the capacity of process except:

(a) The purchase of additional equipment
(b) Scheduled machine maintenance
(c) Larger production lot sizes
(d) Increasing the backlog before each machine*

9. The direct inputs to the Capacity Requirements Plan include all of the following
EXCEPT:
(a) Projected On-Hand inventory levels.
(b) Planned order releases of MRP.
(c) Engineering standards.
(d). Actual MRP order releases.

10. A manufacturer of stamped metal parts has a sales forecast for the next 5 weeks
of a particular part as follows:
Week 1 2 3 4 5
Forecast 2000 2500 3000 3000 3500
Beginning inventory equals 13,000 units and the firm wants to maintain this level
at the end of the planning period. What weekly production rate is necessary?
(a) 3000 units
(b) 2800 units*
(c) 2500 units
(d) 4000 units

b) Discussion Questions
1. Why do we perform intermediate-term (aggregate) planning using
aggregate products rather than individual items?
2. Explain the use of forecasting in long-term, intermediate-term and short-
term decision-making.
3. What are the components of a time series? Briefly explain each.
4. How do we measure accuracy of a forecast?
5. Describe the basic steps in forecasting methodology.
6. Which method do we use for forecasting the following:
a. Sales of a four wheeler
b. Sales of a refrigerator
c. Nationwide Consumption of salt
7. What criteria are important in choosing a forecasting method?
8. What costs need to be considered in aggregate production planning?
Why?
9. Explain various strategies available for meeting fluctuating demand. What
are the costs involved?
10. Explain the role of forecasting and inventory in aggregate production
planning.