Scenario B

Suppose Bill uses his own "Magic" Forecasting method. His forecast for April through August is shown below.

MONTH	BILLS MAGIC FORECAST	ACTUAL DEMAND
April	150	165
May	220	215
June	215	205
July	245	255
August	205	225

What is the CFE for Bill's Magic Forecast from April through August? Pick the closest answer.

A. -50

B. -30

C. -10

D. 10

E. 30

F. 50

Question 6

What is the MAD for Bills Magic Forecast? Pick the closest answer.

A. -30

B. -20

C. -10

D. 0

E. 10

F. 20

G. 30

Question 7

What is the MSE for Bills Magic Forecast? Pick the closest answer.

A. 50

B. 75

C. 100

D. 125

F. 150

G. 175

Question 8

Suppose underforecasting demand costs Bill $100 per unit, and overforecasting costs bill $250 per unit. What is the cost of forecasting error for Bills Magic Forecast for April through August? Pick the closest answer.

A. -4000

B. -2000

C. 0

D. 2000

E. 4000

F. 6000

G. 8000

Question 9

Increasing the alpha value in an exponential smoothing model (e.g., from 0.2 to 0.8) would always have what effect?

A. The forecast would decrease

B. The forecast would increase

C. The forecast will remain unchanged

D. The forecast will become more sensitive to sudden changes in demand

E. The forecast will become less sensitive to sudden changes in demand

Question 10

Increasing the number of periods (n) in a simple moving average model from n=2 to n=5 would always have what effect?

A. The forecast would decrease

B. The forecast would increase

C. The forecast will remain unchanged

D. The forecast will become more sensitive to sudden changes in demand

E. The forecast will become less sensitive to sudden changes in demand