Production Planning and Control Questions and Answers – Major Categories of Forecasting

This set of Production Planning and Control Multiple Choice Questions & Answers (MCQs) focuses on “Major Categories of Forecasting”.

1. Which one of the following is not related to operations generated forecasts?
a) Inventory requirements
b) Resource needs
c) Time requirements
d) Sales

Explanation: Inventory requirements, resource needs and time requirements are needed when the operation is going on or is about to start and sales is when the operation is complete. So, sales are not operations generated forecast.

2. Which one of the following is not true for forecasting?
a) Judgmental
b) Time series
c) Time horizon
d) Associative

Explanation: Judgmental, time series and associative are the types of forecasting but time horizon is the length of time for which forecast is to be done in the future.

3. In which of the following forecasting technique, subjective inputs obtained from various sources are analyzed?
a) Judgmental forecast
b) Time series forecast
c) Associative model
d) Time horizon forecast

Explanation: When there is lack of historical data or in new market conditions, judgmental forecast is done and analysis of inputs from various sources is done.

4. In which of the following forecasting technique, data obtained from past experience is analyzed?
a) Judgmental forecast
b) Time series forecast
c) Time horizon forecast
d) Associative model

Explanation: All the data obtained from previous operations or previous products made are collected and analyzed and used for further forecasting is done in time series forecast.

5. Delphi method is used for _____
a) Judgemental forecast
b) Time series forecast
c) Time horizon forecast
d) Associative model

Explanation: Delphi method is based on the decision of experts or a panel of experts which makes the decision on operations where no historical data is given and is called as judgmental forecasting.

6. What is known as the short term regular variation related to calendar or time of day?
a) Trend
b) Seasonality
c) Cycles
d) Random variations

Explanation: There is always a variation which is short related to time. It can be in weeks or months but it is always regular. It has a pattern that repeats which is called as seasonality.

7. The demand for period t-2 and t-1 is 10 and 12 cases respectively. As per naïve method, what will be the demand for next ‘t’ period?
a) 10
b) 11
c) 12
d) 14

Explanation: According to naïve method, the demand for next period is based on the previous periods. As t-2 has 10 cases and t-1 has 12 cases, so we can see that there is an increment of 2 cases with a decrement in time. So, 14 is the correct answer.

8. What is the form of linear trend equation?
a) F = a – bt
b) F = a + bt
c) F = 2a + bt
d) F = 2a – bt

Explanation:

The variation of Ft = a + bt is shown in the above graph, where,
Ft = Forecast for period t
t = Specified number of time periods
a = Value of Ft at t = 0
b = Slope of the line

9. Which one of the following is not a qualitative forecasting?
a) Input-output models
b) Market surveys
c) Delphi method
d) Life cycle analogy

Explanation: Input-output models comes under quantitative forecasting which examine the flow of goods and services throughout the entire economy and qualitative forecasting is done on the basis of previous data available.

10. Which of the following methods has the assumption that one measurable variable causes the other to change in a predictable fashion?
a) Input-output models
b) Econometric models
c) Simulation models
d) Regression

Explanation: Regression is a statistical method to develop a defined analytic relationship between two or more variables. The assumption is such that change in one variable causes change in the other variable.

11. A three period moving average is used in simple moving average. The data of the different periods is given in the table. Find the simple moving average for period 5.

Period Demand
1 31
2 26
3 19
4 18

a) 21
b) 20
c) 22
d) 19

Explanation: It is a three period moving average, so for calculating the next period’s moving average, average of last three periods is taken. Here, average of period 2, 3 and 4 is taken which is,
$$\frac {26+19+18}{3}$$ = 21

12. In weighted moving average, if the weight given to last three periods is 0.5, 0.3 and 0.2. What will be the forecast for period 5?

Period Demand
1 31
2 26
3 19
4 18

a) 19.6
b) 19.4
c) 19.9
d) 20.1

Explanation: In weighted moving average, weights given are multiplied with maximum value given to the last period. Here, for period 5, forecast = 18(0.5) + 19(0.3) + 26(0.2) = 19.9

13. The last period’s forecast was 70 and demand was 60. What is the simple exponential smoothing forecast with an alpha of 0.4 for the next period?
a) 63.8
b) 65
c) 62
d) 66

Explanation: In exponential smoothing method, the formula used to determine the forecast is given by,
Ft = Ft-1 + α (At-1 – Ft-1)
= 0.4 × 60 + (1 – 0.4) × 70
= 24 + 42
= 66

Sanfoundry Global Education & Learning Series – Production Planning and Control.

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