MGT 301 Exam 3 || All Questions Answered Correctly.
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Course
MGT 301
Institution
MGT 301
Define forecasting and the goals of forecasting. correct answers Forecasting provides an estimate of future demand
Goal: minimize forecast error and match supply and demand
- Identify factors that influence demand
- Companies must accurately forecast demand to produce & deliver the right quant...
MGT 301 Exam 3 || All Questions Answered Correctly.
Define forecasting and the goals of forecasting. correct answers Forecasting provides an estimate
of future demand
Goal: minimize forecast error and match supply and demand
- Identify factors that influence demand
- Companies must accurately forecast demand to produce & deliver the right quantities
List the benefits of improved forecasts. correct answers Improved forecasts benefits all trading
partners with:
-lower inventories
-reduced stock-outs
-smoother production plans
-reduced costs
-improved customer service•
Compare and contrast qualitative and quantitative forecasts and explain when you would use a
qualitative forecast or a quantitative forecast during different stages of a product's life cycle
correct answers Qualitative Methods:
generally used when data are limited, unavailable, or not currently relevant. The forecast depends
on the skill & experience of the forecaster & available information.
Based on human judgment, opinions; subjective and nonmathematical.
Four models used are:
1.Jury of executive opinion
2.Delphi method
3.Salesforce composite
4.Consumer survey
Quantitative Methods:
Based on mathematics; quantitative by nature.
- Time Series Forecasting
(historical data is used to predict future demand) (Assumes that the future is an extension of the
past)
•Trend Projection (using regression analysis)
•Associative forecasting (Cause and Effect) (regression analysis) (One or more factors
(independent variables) predict future demand)
Use a combination of quantitative and qualitative techniques
Define the different qualitative models and list the strengths and weaknesses of each correct
answers 1. Jury of executive opinion:
Gathers opinions from a group of company executives that meets together to predict sales. The
executives' predictions are averaged so that the forecast is a composite of their points of view.
,Advantages of Jury of Executive opinion?
-based on reliable, inside opinion, and knowledge of strategy.-quick and easy to use -good for
new product forecasting
Disadvantages of the jury of executive opinion?
-results depend on executives' skills -all predictions carry equal weight, which is a problem if
some execs' predictions are not as relevant/accurate as others -one person can dominate the
process.
2.Delphi method:
Involves company executives and outside experts such as university professors, consultants, or
industry analysts. It is based on the assumption that several experts can arrive at a better forecast
than one.
Predictions are made secretly and then averaged together. The results of the first poll are sent to
the experts, who are asked to respond with a second opinion. The process is repeated until a very
narrow, firm median is agreed upon.
Advantages of the Delphi Method?
-can prevent social pressure and groupthink -can prevent forceful individuals from dominating
others
-can prevent timeconsuming discussions or arguments
-can gather opinions from those who won't speak out in groups -good for long range forecast and
technological change.
Disadvantages of the Delphi Method.
-takes a lot of time to complete multiple rounds of the process -can be expensive
3.Salesforce composite:
-Method gathers opinions from the sales force -Each salesperson forecasts his/her sales for the
future period -The sales analyst then adds those forecasts together to get the sales force
composite forecast for the period.
Advantages of the sales force composite?
-accurate forecasts for individual products (b
Explain why it's preferred to use a combination of qualitative and quantitative forecasts correct
answers Using a combination of qualitative and quantitative data can improve an evaluation by
ensuring that the limitations of one type of data are balanced by the strengths of another. This
will ensure that understanding is improved by integrating different ways of knowing.
List & define the components of time series data (trend, seasonality, cyclicality, irregular,
random) correct answers Trend:
Data consistently increase or decrease
persistent upward or downward
, duration is usually several years or months
Seasonality:
Data consistently show peaks and valleys that repeat over a consistent interval like hours, days,
weeks, months, seasons
a regular pattern of up & down fluctuations
usually due to the different months and seasons
Cyclicality:
Data reveal gradual increases and decreases over extended periods
wavelike movements that are longer than a year
Repeating up & down movements
Usually 2-10 years duration
Irregular:
outliers
erratic, unsystematic, "residual" fluctuations
it is due to random variations or unforeseen events (tornado, covid)
these periods are usually short and non-repeating
Random:
due to unexpected or unpredictable events
these will take place from time to time and are unpredictable
Explain the limitations of smoothing models when there is trend in the sales data correct answers
Forecasts will lag behind trend
Can lead to:
-too little capacity, inventory, staff and vice-versa
Define and calculate forecast error & know what forecast bias is correct answers the difference
between actual quantity + forecast
Error:
-MAD mean absolute deviation
-MAAPE mean absolute percentage error
-MSE mean squared error
Bias:
-RSFE running sum of forecast errors
-TS tracking signal
Define Collaborative Planning, Forecasting and Replenishment (CPFR) and explain its benefits
and process correct answers A nine-step process for SC integration that allows a supplier and
customers to collaborate on forecasting by using the Internet
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