10) As yet another earthquake rattled her china cabinet, the data scientist decided to test whether
hydraulic fracturing (or fracking) truly was predictive of the number of earthquakes in the region. What
proportion of the number of earthquakes is predicted by the number of water injections based on the
available data?
Injections
Earthquakes
137
682
331
833
360
905
442
1008
478
1482
529
1742
A) 0.96
B) 0.89
C) 0.85
D) 0.72
11) Demand was low two years ago but increased sharply last year thanks to an aggressive marketing
campaign. A time series model that puts the greatest emphasis on the most recent period is probably the
best choice to predict next year’s demand.
12) Multiple regression is used when the forecaster believes that more than one independent variable
should be used to predict the variable of interest.
13) Models that predict values based upon some independent factor(s) other than time are ________
forecasting models.
14) The ________ value for a regression or multiple regression model shows the percentage of variability
in the dependent variable that is explained by the independent variable(s).
15) Multiple regression was used to forecast success in college (GPA) based upon SAT score, high school
GPA, and hours spent on-line. Use the regression output shown and comment on the overall fit of the
model, the usefulness of each independent variable, and the value to an admissions department of using
the model to make admission decisions. What is the model’s forecast for an applicant having a high
school GPA of 2.5 and an SAT score of 1000 that spends 20 hours a week on-line? What other variables do
you feel would make good indicators of college GPA?
16) A poultry farmer that dabbles in statistics is interested in exploring the relationship between two
types of feed (layer pellets and scratch), water, and the output of his laying hens. For ten days he records
the number of ounces of layer pellets and scratch the hens consume and the number of fluid ounces of
water and tracks the number of eggs that are produced. What is his regression equation based on the
data?
Scratch
Layer Pellets
Water
Eggs
48
29
36
24
44
27
34
22
41
22
31
20
42
21
32
20
48
23
34
22
44
28
34
23
42
22
37
21
41
28
33
22
42
22
31
20
47
29
37
24
17) A poultry farmer that dabbles in statistics is interested in exploring the relationship between two
types of feed (layer pellets and scratch), water, and the output of his laying hens. For ten days he records
the number of ounces of layer pellets and scratch the hens consume and the number of fluid ounces of
water and tracks the number of eggs that are produced.
Scratch
Layer Pellets
Water
Eggs
48
29
36
24
44
27
34
22
41
22
31
20
42
21
32
20
48
23
34
22
44
28
34
23
42
22
37
21
41
28
33
22
42
22
31
20
47
29
37
24
He develops one equation based on three predictors, the scratch, pellets, and water, and another equation
based only on the layer pellet consumption. The output for the two models are shown side by side.
Comment on the two models and which one should be used.
Pellets, Scratch, Water
Pellets
Multiple R
0.994
0.904
R Square
0.987
0.817
Adjusted R Square
0.981
0.794
Standard Error
0.214
0.703
Observations
10
10
18) As yet another earthquake rattled his china cabinet, the data scientist vowed to once and for all
determine whether hydraulic fracturing (or fracking) was predictive of the number of earthquakes in the
region. What is the regression equation based on the data?
Injections
Earthquakes
137
682
331
833
360
905
442
1008
478
1482
529
1742
19) As yet another earthquake rattled his china cabinet, the data scientist vowed to once and for all
determine whether hydraulic fracturing (where water is injected into the earth) was predictive of the
number of earthquakes in the region. Using the data below, what evidence can you find to support the
notion that the number of injections helps explain the number of earthquakes in the region?
Injections
Earthquakes
137
682
331
833
360
905
442
1008
478
1482
529
1742
9.7 Measures of Forecast Accuracy
1) Which of these forecasts is the BEST?
A) the one with a MAD of zero
B) the one with the tracking signal of +4
C) the one with the tracking signal of -4
D) the one where the tracking signal times the MAD equals zero
2) Nora Damus reviews her forecasting triumphs and failures as part of her annual report to the Chief
Operating Officer. She notes that her monthly forecast for batteries has a mean forecast error of 20, and a
mean absolute deviation of 20. Which of the following statements about her forecast is BEST?
A) Nora has miscalculated her mean forecast error.
B) Nora has miscalculated her mean absolute deviation.
C) Nora has a negative tracking signal.
D) Nora has a positive tracking signal.
3) A counseling service records the number of calls to their hotline for the last year. Based on MAD,
which of these models does the best job of forecasting?
Month
Demand
January
111
February
127
March
146
April
159
May
165
June
165
July
178
August
182
September
191
October
208
November
223
December
228
A) a simple moving average of three periods
B) a simple moving average of five periods
C) a weighted moving average of .7, .2, .1
D) a weighted moving average of .5, .2, .2, .1
4) The forecast data matches the actual data perfectly if the mean absolute deviation is 0.0.
5) A model with a positive mean forecast error suggests that, on average, the model underforecasts.
6) The tracking signal calculated for the first forecast is always either +1 or –1.
7) In order to indicate ________ in a forecast model, you should use the mean forecast error approach
rather than the mean absolute deviation approach.
8) A tracking signal value between ________ and ________ would suggest that the forecasting technique
in use is considered to be performing well.
9) A forecaster is assessing two different models for demand. The output from each model and the actual
demand data appear in the table. Use MAD and a tracking signal to compare the two models. Which
model does a better job of forecasting?
Demand
Model 1
Model 2
52
55.0
51.0
52
54.7
51.9
60
54.4
52.0
56
55.0
59.2
58
55.1
56.3
58
55.4
57.8
52
55.6
58.0
57
55.3
52.6
53
55.4
56.6
57
55.2
53.4
Demand
Model 1
Model 2
FE 1
FE 2
AD 1
AD 2
Tracking 1
Tracking 2
52
55.0
51.0
-3.0
1.0
3.0
1.0
-1.0
1.0
52
54.7
51.9
-2.7
0.1
2.7
0.1
-2.0
2.0
60
54.4
52.0
5.6
8.0
5.6
8.0
0.0
3.0
56
55.0
59.2
1.0
-3.2
1.0
3.2
0.3
1.9
58
55.1
56.3
2.9
1.7
2.9
1.7
1.2
2.7
58
55.4
57.8
2.6
0.2
2.6
0.2
2.2
3.3
52
55.6
58.0
-3.6
-6.0
3.6
6.0
0.9
0.6
57
55.3
52.6
1.7
4.4
1.7
4.4
1.6
2.0
53
55.4
56.6
-2.4
-3.6
2.4
3.6
0.7
0.8
57
55.2
53.4
1.8
3.6
1.8
3.6
1.4
2.0
MAD
2.7
3.2
Diff: 3
Reference: 9.7 Measures of Forecast Accuracy
Keywords: forecast error, MAD, mean absolute deviation, tracking signal
AACSB: Analytical Thinking
LO: 9.4: Calculate measures of forecasting accuracy and interpret the results.
10) The chief meteorologist quit in a huff one afternoon and the station manager turned to a demented
walrus to prepare the forecast for the following nine days during sweeps week. The walrus was a ratings
hit, but his forecasts, displayed in the table below, were not entirely accurate. Calculate MAD, MAPE and
a tracking signal for the forecasts.
Period
Actual
Forecast
1
26
12
2
7
23
3
12
4
4
20
19
5
27
22
6
14
8
7
10
28
8
27
10
9
27
26
Error
Track Sig
.474
.718
2.16
1.884
11) As yet another earthquake rattled his china cabinet, the data scientist vowed to once and for all
determine whether hydraulic fracturing (where water is injected into the earth) was predictive of the
number of earthquakes in the region. Using the data below, develop a regression equation and calculate
the MAD and MAPE.
Injections
Earthquakes
137
682
331
833
360
905
442
1008
478
1482
529
1742
1059
1008
1266
1482
1357
1742
1485
9.9 Collaborative Planning, Forecasting, and Replenishment (CPFR)
1) Which one of the following statements regarding collaborative planning, forecasting, and
replenishment (CPFR) systems is best?
A) In CPFR, each business develops a sales and operations plan and the mainframe system reconciles
these plans to find a middle ground that all businesses work towards.
B) CPFR is a set of business processes.
C) CPFR has the Program Management Body of Knowledge (PMBOK©) as its basis.
D) Studies have demonstrated that manual, paper-based CPFR systems are faster and more accurate than
computer-based CPFR systems.
2) A collaborative planning, forecasting and replenishment system eliminates the need for forecasting.
3) What distinguishes collaborative planning, forecasting, and replenishment (CPFR) systems from
traditional planning approaches is the emphasis on forecasting.
4) Supply chain partners might use ________ to develop joint sales and operations plans and projections
of output if they have agreed on a common set of objectives.
5) What is a collaborative planning, forecasting, and replenishment system and how might it benefit those
who choose to use it?