Forecasting Exam #1 Review Questions



Forecasting Exam #1 Review Questions

Introduction

How would you define forecasting?

How important is forecasting?

How is the sales forecast used in a company?

What is planning? How does this relate to forecasting?

What are some reasons for planning?

What time frame is used for immediate, short-term, medium-term, and long-term forecasting?

What are the steps of the forecasting process?

Step 1

What level of aggregation should you collect data for forecasting?

What unit of measurement should be used in storing the data?

Why do we segment a variable for forecasting?

What are the three major ways to express a forecast? Can you give an example of each way?

What is PERT?

Step 2

What are the three main approaches to forecasting and how would we organize the techniques under each approach?

Can you give a brief description of the forecasting techniques that were covered in class or at least be able to recognize the technique if given a description?

What forecasting methods would be used in which industries (industrial, consumer, service)?

Which forecasting techniques are used the most, have most familiarity, and are most satisfying to corporate users?

How would you make a scatter-chart or a scatter-diagram?

What four major data patterns comprise every data series?

Over what time frame would each data pattern have an influence?

What are the stages of the business cycle?

What forecasting methods are used at each stage of the life cyle for a product?

What are the characteristics of judgmental versus quantitative (statistical) approaches to forecasting?

Step 3

How would you make a flowchart?

What types of data are available to be used for forecasting? (primary, secondary, internal, external)? What sources? (primary, secondary)

What problems might you have with the data you collect?

What does the term "preprocessing" mean and what types of activities are done during this stage of the forecasting process?

How would you handle missing data values?

How would you detrend a data series?

How would you deseasonalize a data series?

What are the two major ways that we use data in forecasting?

How much data do forecasting techniques require?

When would you discard data rather than use it for forecasting?

Step 4

What are the ways to calculate the accuracy of the forecast? Can you demonstrate how to calculate each one?

What do we mean by "parameterizing" a forecasting technique?

When should you use each error measure? What are the error characteristics?

Step 5

At what level and for what time horizon is the most accurate forecasting done in the company?

What criteria are used to evaluate a forecasting technique? Which criteria have been judged by practitioners to be the most important?

What is a self fulfilling prophecy as it relates to forecasting?

What are the major components that would go into the cost of forecasting?

What are the characteristics of complex versus simple methods of forecasting?

Why is corporate forecasting more accurate than lower level forecasting?

Step 6

What things might alter the basic forecast?

Step 7

What is the difference between a bottom up approach and a top down approach to forecasting?

Why did Edsel have forecasting problems?

Qualitative Methods

Can you identify qualitative methods if given a description of the method?

What are some advantages and disadvantages of using user expectations, sales force composite, and the jury of executive opinion methods of forecasting?

How can salespeople's forecasts be improved?

What is technological forecasting?

What is the difference between exploratory versus normative technological forecasting?

How is the Delphi technique performed?

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