Operations and Supply Chain Management The Core

80 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
MAD = ​ ____ 315
6 ​ = 52.5
Tracking ​ signal​ = ​ ____ − 55
​
52.5 ​ = − 1.05​ ​
MAPE = ​ ____ 52.5
805 ​ = 6.52%
–1.05
There is not enough evidence to reject the forecasting model, so we accept its recommendations.
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DISCUSSION QUESTIONS
LO3–1 1. Why is forecasting necessary in OSCM?
2. It is a common saying that the only thing certain about a forecast is that it will be
wrong. What is meant by this?
LO3–2 3. From the choice of the simple moving average, weighted moving average,
exponential smoothing, and linear regression analysis, which forecasting
technique would you consider the most accurate? Why?
4. All forecasting methods using exponential smoothing, adaptive smoothing, and
exponential smoothing including trend require starting values to get the equations
going. How would you select the starting value for, say, F t−1 ?
5. How is a seasonal index computed from a regression line analysis?
6. Discuss the basic differences between the mean absolute deviation and mean
absolute percent error.
7. What implications do forecast errors have for the search for ultrasophisticated
statistical forecasting models?
8. Causal relationships are potentially useful for which component of a time series?
LO3–3 9. Let’s say you work for a company that makes prepared breakfast cereals like corn
flakes. Your company is planning to introduce a new hot breakfast product made
from whole grains that would require some minimal preparation by the consumer.
This would be a completely new product for the company. How would you
propose forecasting initial demand for this product?
LO3–4 10. How has the development of the Internet affected the way companies forecast in
support of their supply chain planning process?
11. What sorts of risks do you see in reliance on the Internet in the use of
Collaborative Planning, Forecasting, and Replenishment (CPFR)?