16 Questions
What is the primary purpose of the smoothing constant $\alpha$ in exponential smoothing?
To balance the trade-off between smoothing random variations and responding to real changes
Which range of values for the smoothing constant $\alpha$ is commonly used in exponential smoothing?
0.05 to 0.5
What is one of the primary reasons for the widespread use of exponential smoothing in forecasting?
Its ease of calculation and flexibility in adjusting the weighting scheme
When selecting a forecasting technique, what are the two most important factors to consider according to the text?
Cost and accuracy
What is the recommended approach when considering the trade-off between forecast accuracy and cost?
Find the optimal combination of accuracy and cost deemed best by management
What is the primary benefit of using exponential smoothing over other forecasting techniques?
Its ease of calculation and flexibility in adjusting the weighting scheme
Which of the following strategies can help improve short-term forecasting accuracy?
Maintaining accurate and up-to-date information on prices, demand, and other variables
What is the relationship between forecast accuracy and the forecast horizon?
Forecasts covering shorter time frames tend to be more accurate
Which of the following strategies can help shorten the time horizon for forecasts?
Building flexibility into operations to permit rapid response to changing demands
What is the purpose of measuring forecast errors?
To compare the actual values with the predicted or forecast values
Which of the following is true regarding exponential smoothing methods?
Exponential smoothing assigns exponentially decreasing weights to past observations
What is the relationship between forecast errors and forecast accuracy?
Smaller forecast errors indicate higher forecast accuracy
What does the smoothing constant (alpha) represent in exponential smoothing?
The percentage of the forecast error that should be included in the new forecast
How does the value of the smoothing constant (alpha) affect the responsiveness of the exponential smoothing forecast?
The higher the value of alpha, the faster the forecast will adjust to errors
Which of the following statements about exponential smoothing is true?
Exponential smoothing is a relatively simple weighted averaging method
Which of the following is a key characteristic of exponential smoothing?
It adjusts the forecast based on a percentage of the previous forecast error
Learn about strategies to enhance short-term forecasts by maintaining accurate and up-to-date information, and understanding the inverse relation between forecast accuracy and time frame. Explore methods to boost forecasting accuracy without necessarily searching for new techniques.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
