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1. 1. Time series methods

a. discover a pattern in historical data and project it into the future.

b. include cause-effect relationships.
c. are useful when historical information is not available.
d. All of the alternatives are true.: a (discover a pattern in historical data and
project it into the future.)
2. 2. Gradual shifting of a time series over a long period of time is called

a. periodicity.
b. cycle.
c. regression.
d. trend.: d (trend.)
3. 3. Seasonal components

a. cannot be predicted.
b. are regular repeated patterns.
c. are long runs of observations above or below the trend line.
d. reflect a shift in the series over time.: b (are regular repeated patterns.)
4. 4. Short-term, unanticipated, and nonrecurring factors in a time series pro-
vide the random variability known as

a. uncertainty.
b. the forecast error.
c. the residuals.
d. the irregular component.: d (the irregular component.)
5. 5. The focus of smoothing methods is to smooth

a. the irregular component.

b. wide seasonal variations.
c. significant trend effects.
d. long range forecasts.: a (the irregular component.)
6. 6. Forecast errors

a. are the difference in successive values of a time series

b. are the differences between actual and forecast values
c. should all be nonnegative
d. should be summed to judge the goodness of a forecasting model: b (are the
differences between actual and forecast values)
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7. 7. To select a value for ±for exponential smoothing

a. use a small ±when the series varies substantially.

b. use a large ±when the series has little random variability.
c. use any value between 0 and 1
d. All of the alternatives are true.: d (All of the alternatives are true.)
8. 8. Linear trend is calculated as T_t = 28.5 + .75t. The trend projection for
period 15 is

a. 11.25
b. 28.50
c. 39.75
d. 44.25: c (39.75)
9. 9. The multiplicative model

a. uses centered moving averages to smooth the trend fluctuations.

b. removes trend before isolating the seasonal components.
c. deseasonalizes a time series by dividing the values by the appropriate
seasonal index.
d. provides a unique seasonal index for each observation of the time series.: c
(deseasonalizes a time series by dividing the values by the appropriate seasonal
index.)
10. 10. Causal models

a. should avoid the use of regression analysis.

b. attempt to explain a time series' behavior.
c. do not use time series data.
d. All of the alternatives are true.: b (attempt to explain a time series' behavior.)
11. 11. A qualitative forecasting method that obtains forecasts through "group
consensus" is known as the

a. Autoregressive model
b. Delphi approach
c. mean absolute deviation
d. None of these alternatives is correct.: b (Delphi approach)
12. 12. The trend component is easy to identify by using

a. moving averages
b. exponential smoothing
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c. regression analysis
d. the Delphi: c (regression analysis)
13. 13. The forecasting method that is appropriate when the time series has no
significant trend, cyclical, or seasonal effect is

a. moving averages
b. mean squared error
c. mean average deviation
d. qualitative forecasting methods: a (moving averages)
14. 14. If data for a time series analysis is collected on an annual basis only,
which component may be ignored?

a. trend
b. seasonal
c. cyclical
d. irregular: b (seasonal)
15. 15. One measure of the accuracy of a forecasting model is the

a. smoothing constant
b. trend component
c. mean absolute deviation
d. seasonal index: c (mean absolute deviation)
16. 16. Which of the following is a qualitative forecasting method?

a. trend projection
b. time series method
c. smoothing method
d. Delphi method: d (Delphi method)
17. 17. Which of the following forecasting methods puts the least weight on
the most recent time series value?

a. exponential smoothing with ±= .3

b. exponential smoothing with ±= .2
c. moving average using the most recent 4 periods
d. moving average using the most recent 3 periods: b (exponential smoothing
with ± = .2)
18. 18. Using exponential smoothing, the demand forecast for time period 10
equals the demand forecast for time period 9 plus

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a. ±times (the demand forecast for time period 8)
b. ±times (the error in the demand forecast for time period 9)
c. ±times (the observed demand in time period 9)
d. ±times (the demand forecast for time period 9): b (±times (the error in the
demand forecast for time period 9))
19. 19. Which of the following exponential smoothing constant values puts the
same weight on the most recent time series value as does a 5-period moving
average?

a. ±= .2
b. ±= .25
c. ±= .75
d. ±= .8: a (± = .2)
20. 20. The time series component that is analogous to the seasonal compo-
nent but over a longer period of time is the

a. irregular component
b. trend component
c. causal component
d. cyclical component: d (cyclical component)
21. (T/F) Time series methods base forecasts only on past values of the vari-
ables: T(rue)
22. (T/F) Quantitative forecasting methods can be used when past information
about the variable being forecast is unavailable: F(alse)
23. (T/F) Quantitative forecasting methods do not require that patterns from
the past will necessarily continue in the future.: F(alse)
24. (T/F) Trend in a time series must be linear: F(alse)
25. (T/F) All quarterly time series contain seasonality: F(alse)
26. (T/F) A four-period moving average forecast for period 10 would be found
by averaging the values from periods 10, 9, 8, and 7: F(alse)
27. (T/F) If the random variability in a time series is great, a high ±value should
be used to exponentially smooth out the fluctuations.: F(alse)
28. (T/F) With fewer periods in a moving average, it will take longer to adjust
to a new level of data values: F(alse)
29. (T/F) To make period-to-period comparisons more meaningful and identify
trend, the time series should be deseasonalized.: T(rue)
30. (T/F) Qualitative forecasting techniques should be applied in situations
where time series data exists, but where conditions are expected to change.-
: T(rue)
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31. (T/F) A time series model with a seasonal pattern will always involve
quarterly data.: F(alse)
32. (T/F) Seasonal components with values above 1.00 indicate actual values
below the trend line.: F(alse)
33. (T/F) Any recurring sequence of points above and below the trend line
lasting less than one year can be attributed to the cyclical component of the
time series.: F(alse)
34. (T/F) Smoothing methods are more appropriate for a stable time series than
when significant trend or seasonal patterns are present.: T(rue)
35. (T/F) The exponential smoothing forecast for any period is a weighted
average of all the previous actual values for the time series: T(rue)
36. (T/F) For a multiplicative time series model, the sum of the seasonal
indexes should equal the number of seasons.: T(rue)
37. (T/F) The mean squared error is influenced much more by large forecast
errors than is the mean absolute error.: T(rue)
38. (T/F) If a time series has a significant trend pattern, then one should not
use a moving average to forecast.: T(rue)
39. (T/F) If the random variability in a time series is great and exponential
smoothing is being used to forecast, then a high alpha value (± ) should be
used: F(alse)
40. (T/F) An alpha (±) value of .2 will cause an exponential smoothing forecast
to react more quickly to a sudden drop in demand than will an
equal to .4.: F(alse)
41. (T/F) Exponential smoothing with
=.2 and a moving average with
±
n=5 put the same weight on the actual
value for the current period.: T(rue)
42. (T/F) Time series data can exhibit seasonal patterns of less than one month
in duration: T(rue)

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