SCM 6e Chopra - Chapter 7 MCQs

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1. The basis for all strategic and planning decisions in a A

supply chain comes from
A) the forecast of demand.
B) sales targets.
C) profitability projections.
D) production efficiency goals.

2. For push processes, a manager must forecast what D

customer demand will be in order to
A) plan the service level.
B) plan the level of available capacity and inventory.
C) plan the level of productivity.
D) plan the level of production.

3. The result of each stage in the supply chain making D

its own separate forecast is
A) an accurate forecast.
B) a more accurate forecast.
C) a match between supply and demand.
D) a mismatch between supply and demand.

4. When all stages of a supply chain produce a collabo- C

rative forecast, it tends to be
A) much more detailed.
B) much more complex.
C) much more accurate.
D) much more flexible.

5. The resulting accuracy of a collaborative forecast en- B

ables supply chains to be
A) more responsive but less efficient in serving their
customers.
B) both more responsive and more efficient in serving
their customers.
C) less responsive but less efficient in serving their
customers.
D) both less responsive and less efficient in serving
their customers.

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6. Leaders in many supply chains have started moving D
A) toward independent forecasting to improve their
ability to match supply and demand.
B) toward consecutive forecasting to improve their
ability to match supply and demand.
C) toward sequential forecasting to improve their abil-
ity to match supply and demand.
D) toward collaborative forecasting to improve their
ability to match supply and demand.

7. Production can utilize forecasts to make decisions A

concerning
A) scheduling.
B) sales-force allocation.
C) promotions.
D) budgetary planning.

8. Personnel can utilize forecasts to make decisions B

concerning
A) scheduling.
B) promotions.
C) plant/equipment investment.
D) purchasing.

9. Mature products with stable demand A

A) are usually easiest to forecast.
B) are usually hardest to forecast.
C) cannot be forecast.
D) do not need to be forecast.

10. When either the supply of raw materials or the demand C

for the finished product is highly variable, forecasting
and the accompanying managerial decisions
A) are extremely simple.
B) are relatively straightforward.
C) are extremely difficult.
D) should not be attempted.

11. One of the characteristics of forecasts is D

A) aggregate forecasts are usually less accurate than
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disaggregate forecasts.
B) disaggregate forecasts are usually more accurate
than aggregate forecasts.
C) short-term forecasts are usually less accurate than
long-term forecasts.
D) long-term forecasts are usually less accurate than
short-term forecasts.

12. One of the characteristics of forecasts is A

A) aggregate forecasts are usually more accurate than
disaggregate forecasts.
B) disaggregate forecasts are usually more accurate
than aggregate forecasts.
C) short-term forecasts are usually less accurate than
long-term forecasts.
D) long-term forecasts are usually more accurate than
short-term forecasts.

13. Forecasts are always wrong and therefore A

A) should include both the expected value of the fore-
cast and a measure of forecast error.
B) should not include both the expected value of the
forecast and a measure of forecast error.
C) should only be used when there are no accurate
estimates.
D) should be missing the expected value of the fore-
cast and a measure of forecast error.

14. Long-term forecasts are usually less accurate than D

short-term forecasts because
A) short-term forecasts have a larger standard de-
viation of error relative to the mean than long-term
forecasts.
B) short-term forecasts have more standard deviation
of error relative to the mean than long-term forecasts.
C) long-term forecasts have a smaller standard de-
viation of error relative to the mean than short-term
forecasts.
D) long-term forecasts have a larger standard devi-

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ation of error relative to the mean than short-term
forecasts.

15. Aggregate forecasts are usually more accurate than B

disaggregate forecasts because
A) aggregate forecasts tend to have a larger standard
deviation of error relative to the mean.
B) aggregate forecasts tend to have a smaller stan-
dard deviation of error relative to the mean.
C) disaggregate forecasts tend to have a smaller stan-
dard deviation of error relative to the mean.
D) disaggregate forecasts tend to have less standard
deviation of error relative to the mean.

16. In general, the further up the supply chain a company A

is (or the further they are from the consumer),
A) the greater the distortion of information they re-
ceive.
B) the smaller the distortion of information they re-
ceive.
C) the information they receive is more accurate.
D) the information they receive is more useful.

17. Forecasting methods that use historical demand to B

make a forecast are known as
A) qualitative forecasting methods.
B) time series forecasting methods.
C) causal forecasting methods.
D) simulation forecasting methods.

18. Forecasting methods that assume that the demand C

forecast is highly correlated with certain factors in the
environment (e.g., the state of the economy, interest
rates, etc.) to make a forecast are known as
A) qualitative forecasting methods.
B) time series forecasting methods.
C) causal forecasting methods.
D) simulation forecasting methods.

19. D
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Forecasting methods that imitate the consumer choic-
es that give rise to demand to arrive at a forecast are
known as
A) qualitative forecasting methods.
B) time series forecasting methods.
C) causal forecasting methods.
D) simulation forecasting methods.

20. Qualitative forecasting methods are most appropriate B

when
A) there is good historical data available.
B) there is little historical data available.
C) experts do not have critical market intelligence.
D) forecasting demand into the near future.

21. Which forecasting methods are the simplest to im- B

plement and can serve as a good starting point for a
demand forecast?
A) Qualitative forecasting methods
B) Time series forecasting methods
C) Causal forecasting methods
D) Simulation forecasting methods

22. The goal of any forecasting method is to B

A) predict the random component of demand and es-
timate the systematic component.
B) predict the systematic component of demand and
estimate the random component.
C) predict the seasonal component of demand and
estimate the random component.
D) predict the random component of demand and es-
timate the seasonal component.

23. ________ forecasting methods assume that the de- C

mand forecast is highly correlated with certain factors
in the environment (the state of the economy, interest
rates, etc.).
A) Qualitative
B) Time-series

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C) Causal
D) Simulation

24. ________ forecasting methods are primarily subjec- A

tive and rely on human judgment.
A) Qualitative
B) Time-series
C) Causal
D) Simulation

25. ________ forecasting methods use historical demand B

to make a forecast.
A) Qualitative
B) Time-series
C) Causal
D) Simulation

26. The multiplicative form of the systematic component A

of demand is shown as
A) level × trend × seasonal factor.
B) level + trend + seasonal factor.
C) (level + trend) × seasonal factor.
D) level × (trend + seasonal factor).

27. The additive form of the systematic component of B

demand is shown as
A) level × trend × seasonal factor.
B) level + trend + seasonal factor.
C) (level + trend) × seasonal factor.
D) level × (trend + seasonal factor).

28. The mixed form of the systematic component of de- C

mand is shown as
A) level × trend × seasonal factor.
B) level + trend + seasonal factor.
C) (level + trend) × seasonal factor.
D) level × (trend + seasonal factor).

29. A static method of forecasting A

A) assumes that the estimates of level, trend, and
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seasonality within the systematic component do not
vary as new demand is observed.
B) assumes that the estimates of level, trend, and
seasonality within the systematic component vary as
new demand is observed.
C) the estimates of level, trend, and seasonality are
updated after each demand observation.
D) All of the above are true.

30. In adaptive forecasting, C

A) there is an assumption that the estimates of level,
trend, and seasonality within the systematic compo-
nent do not vary as new demand is observed.
B) the estimates of level, trend, and seasonality within
the systematic component are not adjusted as new
demand is observed.
C) the estimates of level, trend, and seasonality are
updated after each demand observation.
D) All of the above are true.

31. The moving average forecast method is used when B

A) demand has observable trend or seasonality.
B) demand has no observable trend or seasonality.
C) demand has observable trend and seasonality.
D) demand has no observable level or seasonality.

32. The simple exponential smoothing forecast method is B

appropriate when
A) demand has observable trend or seasonality.
B) demand has no observable trend or seasonality.
C) demand has observable trend and seasonality.
D) demand has no observable level or seasonality.

33. The trend corrected exponential smoothing (Holt's C

Model) forecast method is appropriate when
A) demand has observable trend or seasonality.
B) demand has no observable trend or seasonality.
C) demand has observable trend but no seasonality.
D) demand has no observable level or seasonality.

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34. The measure of forecast error where the amount of A
error of each forecast is squared and then an average
is calculated is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) mean absolute percentage error (MAPE).
D) the tracking signal.

35. The measure of forecast error where the absolute B

amount of error of each forecast is averaged is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) mean absolute percentage error (MAPE).
D) bias.

36. The measure of forecast error where the average ab- B

solute error of each forecast is shown as a percentage
of demand is
A) mean squared error (MSE).
B) mean absolute percentage error (MAPE).
C) bias.
D) the tracking signal.

37. The measure of whether a forecast method consis- C

tently over- or underestimates demand is
A) mean absolute deviation (MAD).
B) mean absolute percentage error (MAPE).
C) bias.
D) the tracking signal.

38. The measure of how significantly a forecast method D

consistently over- or underestimates demand is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) bias.
D) the tracking signal.

39. Which of the following is a commonly used measure C

for measuring forecast error?
A) MDE
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B) MKE
C) MAD
D) MES

40. The ________ is a good measure of forecast error D

when the underlying forecast has significant season-
ality and demand varies considerably from one period
to the next.
A) MAD
B) MSE
C) MKE
D) MAPE

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