SOM 464 Exam #1 Chapter 8

What is the equation for exponential smoothing?

(alpha)(latest demand)+(1-alpha)(previous forecast)

How to calculate MAD?

sum of absolute deviations / number of observations

What are components of demand patterns?

trend, seasonal variations, random variation

Which of the following is the best statement about the general principles of forecasting?

forecasts are more accurate for larger groups of items

forecasts are more accurate for nearer periods of time

every forecast should include an estimate of error

all of the above are general principles of forecasting

none of the above is a general principle of forecasting

all of the above are general principles of forecasting

What are the benefits to moving average?

captures variation more, smooths less forecast lags behind