SAMPLE MID-TERM

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Which subjective forecasting method depends upon the anonymous opinion of a panel of
individuals to generate sales forecasts?

A) Sales Force Composites

B) Customer Surveys
C) Jury of Executive Opinion
D) Delphi Method
E) None of the options are correct.

2) Which of the following methods is not useful for forecasting sales of a new product?

A) Time series techniques requiring lots of historical data

B) Delphi Method
C) Consumer Surveys
D) Test market results
E) All of the options are correct.

3) Measures of forecast accuracy based upon a quadratic error cost function, notably root
mean square error (RMSE), tend to treat

Version 1 1
 A) levels of large and small forecast errors equally.
B) large and small forecast errors equally on the margin.
C) large and small forecast errors unequally on the margin.
D) every forecast error with the same penalty.
E) None of the options are correct.

4) Which measure of forecast accuracy is analogous (i.e., calculated very much like) the
standard deviation?

A) Mean Absolute Error

B) Mean Absolute Percentage Error
C) Mean Squared Error
D) Root Mean Squared Error

5) Because of different units being used for various data series, which fit statistic can be
used across different series that are in fact measured in different units?

A) MSE
B) RMSE
C) MAPE
D) MAE
E) None of the options are correct.

6) Ft = At-1 represents

Version 1 2
 A) a simple naïve model.
B) a modified naïve model.
C) the standard assumption in all forecasting models.
D) one way of stating a Bass Model.
E) None of the options are correct.

7) Which time-series component is said to fluctuate around the long-term trend and is fairly
irregular in appearance?

A) Trend.
B) Cyclical.
C) Seasonal.
D) Irregular.
E) None of the options are correct.

8) Forecasting January sales based on the previous month's level of sales is likely to lead to
error if the data are _______.

A) stationary
B) non-cyclical
C) seasonal
D) irregular
E) None of the options are correct.

9) One can realistically not expect to find a model that fits any data set perfectly due to the
_______ component of a time series.

Version 1 3
 A) Trend
B) Seasonal
C) Cyclical
D) Irregular
E) None of the options are correct.

10) Which of the following is not a measure of central tendency in a population?

A) Mean.
B) Mode.
C) Median.
D) Range.

11) Time series smoothing techniques work best for applications where

A) little historical data are available to the forecaster.

B) there is a large amount of historical data available.
C) the forecast horizon is the distant future.
D) only periodic forecasts for untimely events are required.
E) All of the options are correct.

12) In using moving-average smoothing to generate forecasts, a three-month moving average

will be preferred to a six-month moving average

Version 1 4
 A) if the true data cycle is three months.
B) if it has a lower RMSE.
C) if it has a lower mean-squared error.
D) if we have very little data to work with.
E) All of the options are correct.

13) Which method uses an arithmetic mean to forecast the next period?

A) Naïve.
B) Moving averages.
C) Exponential smoothing.
D) Adaptive filtering.
E) None of the options are correct.

14) Simple-exponential smoothing models are useful for data which have

A) a downward time trend.

B) an upward time trend.
C) neither an upward or downward time trend.
D) pronounced seasonality.
E) All of the options are correct.

15) The term 'exponential' in the exponential smoothing method refers to

Version 1 5
 A) weights on past data that increase exponentially into the past.
B) weights on past data that decrease exponentially into the past.
C) calculation uses a weighted average.
D) using a non-weighted polynomial on past data.
E) None of the options are correct.

16) Which of the following is not correct concerning choosing the appropriate size of the
level smoothing constant (α or alpha) in the simple exponential smoothing model?

A) Select values close to zero if the series has a great deal of random variation.
B) Select values close to one if you wish the forecast values to depend strongly on
recent changes in the actual values.
C) Select a value that minimizes RMSE.
D) Select a value that maximizes mean-squared error.
E) All of the options are correct.

17) Holt's smoothing is best applied to data that are

A) nonseasonal.
B) nonstationary.
C) deseasonalized with a trend.
D) nonstationary and nonseasonal.
E) All of the options are correct.

18) In time-series decomposition analysis, "decomposition" refers to

rev: 11_05_2018_QC_CS-146429

Version 1 6
 A) converting an annual trend line into a monthly trend line.
B) deseasonalizing the data.
C) separating a time series into component parts.
D) isolating the cyclical component of a time series.
E) None of the options are correct.

19) Which of the following is not correct about using moving averages to deseasonalize a
time series?

A) The number of periods in the average should reflect the number of seasons.
B) The number of periods for annual data should be 12.
C) The number of periods for quarterly data should be 4.
D) The moving average is interpreted as the typical level of a variable in a given year.
E) All of the options are correct.

20) In time-series decomposition, seasonal factors are calculated by

A) SFt = (Yt) × (CMAt).

B) SFt = Yt/CMAt.
C) (CMAt) × (SFt) = Yt.
D) SFt = Yt − CMAt.
E) None of the options are correct.

Version 1 7
Answer Key

1) D 17) E

2) A 18) C

3) C 19) B

4) D 20) B

5) C

6) A

7) B

8) C

9) D

10) D

11) B

12) E

13) B

14) C

15) B

16) D