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Exam 4: Forecasting

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Question 1

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A restaurant has tracked the number of meals served at lunch over the last four weeks. The data shows little in terms of trends, but does display substantial variation by day of the week. Use the following information to determine the seasonal (daily) index for this restaurant. $\quad\quad\quad\quad\quad\quad\text { Week }$ $\begin{array}{|l|l|l|l|l|}\hline \text { Day } & 1 & 2 & 3 & 4 \\\hline \text { Sunday } & 40 & 35 & 39 & 43 \\\hline \text { Monday } & 54 & 55 & 51 & 59 \\\hline \text { Tuesday } & 61 & 60 & 65 & 64 \\\hline \text { Wednesday } & 72 & 77 & 78 & 69 \\\hline \text { Thursday } & 89 & 80 & 81 & 79 \\\hline \text { Friday } & 91 & 90 & 99 & 95 \\\hline \text { Saturday } & 80 & 82 & 81 & 83 \\\hline\end{array}$

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Question 2

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A time series trend equation is 25.3 + 2.1 X. What is your forecast for period 7?

A) 23.2
B) 25.3
C) 27.4
D) 40.0
E) cannot be determined

F) A) and D)
G) A) and E)

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Question 3

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Weekly sales of ten-grain bread at the local organic food market are in the table below. Based on this data, forecast week 9 using a five-week moving average. $\begin{array} { c c c } \text { Week } & \text { Sales } \\\hline 1 & 415 \\2 & 389 \\3 & 420 \\4 & 382 \\5 & 410 \\6 & 432 \\7 & 405 \\8 & 421\end{array}$

Which of the following is true regarding the two smoothing constants of the Forecast Including Trend (FIT) model?

The forecasting model that pools the opinions of a group of experts or managers is known as the

An approach to exponential smoothing in which the smoothing constant is automatically changed to keep errors to a minimum is called ________.

Identify four components of a time series. Which one of these is rarely forecast? Why is this so?

Seasonal indices adjust raw data for patterns that repeat at regular time intervals.

Time-series data may exhibit which of the following behaviors?

________ forecasts are concerned with rates of technological progress, which can result in the birth of exciting new products, requiring new plants and equipment.

In time series, which of the following cannot be predicted?

Explain the role of regression models (time series and otherwise) in forecasting. That is, how is trend projection able to forecast? How is regression used for causal forecasting?

Forecasts

A skeptical manager asks what short-range forecasts can be used for. Give her three possible uses/purposes.

The degree or strength of a relationship between two variables is shown by the

________ is a measure of overall forecast error for a model.

If a forecast is consistently greater than (or less than) actual values, the forecast is said to be biased.

Give an example-other than a restaurant or other food-service firm-of an organization that experiences an hourly seasonal pattern. (That is, each hour of the day has a pattern that tends to repeat day after day.) Explain.

What is the approximate forecast for May using a four-month moving average? $\begin{array} { | c | c | c | c | c | c | } \hline \text { Nov. } & \text { Dec. } & \text { Jan. } & \text { Feb. } & \text { Mar. } & \text { April } \\\hline 39 & 36 & 40 & 42 & 48 & 46 \\\hline\end{array}$

A skeptical manager asks what long-range forecasts can be used for. Give her three possible uses/purposes.