Analysis and Forecasting Techniques MCQs

Calculate the exponential smoothing forecast for Week 3 using a smoothing constant of 0.2. The forecast for Week 1 is 32. The time-series data follow...

32.00
32.80
25.60
38.40

The probabilities shown in the table below represent the estimate of sales for a new product. Sales (Units).. Probability 0-200 .................1...

0%
11.25%
70%
25%

Automite Company is an automobile replacement parts dealer in a large metropolitan community. Automite is preparing its sales forecast for the coming ...

Simulation techniques.
Correlation and regression analysis.
Statistical sampling.
Time series analysis.

company has accumulated data for the last 24 months in order to determine if there is an independent variable that could be used to estimate shipping...

Flexible budgeting.
Linear programming.
Linear regression.
Variable costing.

The correlation coefficient that indicates the weakest linear association between two variables is

-0.73
-0.11
0.12
0.35

Correlation is a term frequently used in conjunction with regression analysis and is measured by the value of the coefficient of correlation, r. The ...

Is always positive.
Interprets variances in terms of the independent variable.
Ranges in size from negative infinity to positive infinity.
Is a measure of the relative relationship between two variables.

A regression equation

Estimates the dependent variables.
Encompasses factors outside the relevant range.
Is based on objective and constraint functions.
Estimates the independent variable.

All of the following are assumptions underlying the validity of linear regression output except

The errors are normally distributed.
The mean of the errors is zero.
Certainty.
The standard deviation of the errors is constant.

In the standard regression equation y = a + bx, the letter b is best described as a(n)

Independent variable.
Dependent variable.
Constant coefficient
Variable coefficient

The letter x in the standard regression equation is best described as a(n)

Independent variable.
Dependent variable.
Constant coefficient.
Coefficient of determination

In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent va...

1.03
–.02
–.89
.75

The internal auditor of a bank has developed a multiple regression model which has been used for a number of years to estimate the amount of interest ...

Changing to a cross-sectional regression analysis should cause r 2 to increase.
Regression analysis is no longer an appropriate technique to estimate interest income.
Some new factors, not included in the model, are causing interest income to change.
A linear regression analysis would increase the model’s reliability.

The manager of the assembly department of a company would like to estimate the fixed and variable components of the department’s cost. To do so, the...

Regression analysis.
Game theory.
Sensitivity analysis.
Queuing theory.

A division uses a regression in which monthly advertising expenditures are used to predict monthly product sales (both in millions of dollars). The re...

The average monthly advertising expenditure in the sample is $800,000.
When monthly advertising is at its average level, product sales will be $800,000.
On average, for every additional dollar in advertising you get $0.80 in additional sales.
Advertising is not a good predictor of sales because the coefficient is so small.

In determining cost behavior in business, the cost function is often expressed as y = a + bx. Which one of the following cost estimation methods shoul...

Graphic method.
Simple regression.
High and low point method.
Multiple regression.

For cost estimation, simple regression differs from multiple regression in that simple regression uses only

One dependent variable, while multiple regression uses all available data to estimate the cost function
Dependent variables, while multiple regression can use both dependent and independent variables.
One independent variable, while multiple regression uses more than one independent variable.
One dependent variable, while multiple regression uses more than one dependent variable.

Slawford Manufacturing developed the following multiple regression equation, utilizing many years of data, and uses it to model, or estimate, the cos...

A significant reduction in factory overheads, which are a component of fixed costs.
Renegotiation of the union contract calling for much higher wage rates.
A large drop in material costs, as a result of purchasing the material from a foreign source.
A significant change in labor productivity.

In order to analyze sales as a function of advertising expenses, the sales manager of Smith Company developed a simple regression model. The model in...

$2,500
$11,250
$12,250
$12,500

The results of regressing Y against X are as follows: Coefficient Intercept 5.23 Slope 1.54 When the value of X is 10, the estimated value of Y is

6.77
8.05
20.63
53.84

While gathering information to use in preparing the annual budget, a company identifies cost drivers associated with manufacturing costs. Which one o...

Time series analysis.
Exponential smoothing.
Regression analysis.
Learning curve analysis.

A company uses simple regression to predict one of its semi-variable costs. The computed equation of y = –25,000 + 2.5x appears to have a good visu...

The zero level of output is outside of the relevant range.
Too many outliers were included in the data.
An inappropriate cost driver was used as the independent variable.
The cost does not exhibit semi-variable behavior.

A single-product company uses regression to predict one of its factory overhead costs with materials used as the independent variable. The regression ...

Fixed.
Semivariable
Variable.
Not determinable from the provided information.

SleepTight, a nationwide retail mattress firm, will begin selling high-end crib mattresses next year. Management believes sales for this product will ...

Simple regression.
Time-series regression.
Multiple regression.
Maximum likelihood regression

Corrigon Industries is preparing a bid for a special project requiring the production of 35,000 units. The engineering personnel have advised that the...

Linear programming.
Dynamic programming.
Learning curve analysis.
Time series analysis

The average labor cost per unit for the first batch produced by a new process is $120. The cumulative average labor cost after the second batch is $72...

$4,320
$10,368
$2,592
$17,280

Lake Corporation manufactures specialty components for the electronics industry in a highly labor intensive environment. Arc Electronics has asked Lak...

360.0
187.2
307.2
256.0

A particular manufacturing job is subject to an estimated 90% learning curve. The first unit required 50 labor hours to complete. What is the cumulati...

50.0 hours.
45.0 hours.
40.5 hours.
40.0 hours.

The expected value of perfect information is the

Same as the expected profit under certainty
Sum of the conditional profit (loss) for the best event of each act times the probability of each event occurring.
Difference between the expected profit under certainty and the expected opportunity loss.
Difference between the expected profit under certainty and the expected monetary value of the best act under uncertainty.

A particular manufacturing job is subject to an estimated 80% learning curve. The first unit required 50 labor hours to complete. If the learning curv...

30.0 hours.
40.0 hours.
45.0 hours.
50.0 hours.

A learning curve of 80% assumes that direct labor costs are reduced by 20% for each doubling of output. What is the incremental cost of the sixteenth ...

41%
31%
51%
64%

Red Baron, Inc., is a new competitor in the production of airplane propellers. Red Baron has to train its employees in the process of making propeller...

Lucy.
Sally.
Marcy.
Patty.

It is estimated that a particular manufacturing job is subject to an 80% learning curve. The first unit required 50 labor hours to complete. What is t...

50.0 hours.
40.0 hours.
32.0 hours.
30.0 hours.

A company plans to bid on a special project that calls for a total of 24,000 units. The units will be produced in lots, with the first lot consisting ...

Learning curve techniques.
Differential calculus.
Discounted cash flow techniques.
Linear programming.

In decision making under conditions of uncertainty, expected value refers to the

Likely outcome of a proposed action.
Present value of alternative actions.
Probability of a given outcome from a proposed action.
Weighted average of probable outcomes of an action.

Seacraft, Inc., received a request for a competitive bid for the sale of one of its unique boating products with a desired modification. Seacraft is n...

Expected value analysis.
Learning curve analysis.
Regression analysis.
Continuous probability simulation.

The technique used to predict the change in direct labor hours as a new process stabilizes is

Simple regression.
Multiple regression.
Time series analysis.
Learning curve analysis.

Learning curves are best used to predict

Unit material costs.
Overhead variances.
Total unit costs.
Unit direct labor costs.

A manufacturing company has the opportunity to submit a bid for 20 units of a product on which it has already produced two 10-unit lots. The productio...

40.0%
60.0%
62.5%
80.0%

Which one of the following will allow a better use of standard costs and variance analysis to help improve managerial decision-making?

Company A does not differentiate between variable and fixed overhead in calculating its overhead variances.
Company B uses the prior year’s average actual cost as the current year’s standard.
Company C investigates only negative variances.
Company D constantly revises standards to reflect learning curves

Which one of the following techniques would most likely be used to analyze reductions in the time required to perform a task as experience with that t...

Regression analysis.
Learning curve analysis.
Sensitivity analysis.
Normal probability analysis.

A manufacturing firm plans to bid on a special order of 80 units that will be manufactured in lots of 10 units each. The production manager estimates...

Cost-profit-volume analysis.
The Markov process.
Linear programming analysis.
Learning curve analysis.

Which one of the following statements best demonstrates the concept of the learning curve?

A learning curve is a linear cost behavior influenced by learning.
A learning curve is a judgmental method of estimating costs when learning is present
A learning curve is a percentage by which average time per unit produced decreases as output doubles.
A learning curve is a percentage by which average time falls as output increases by 1.

Langley Corporation is developing a new product that will be manufactured in pairs. The company recently produced the first two units of this product...

400 hours.
380 hours.
360 hours.
324 hours.

The quantitative technique used to project the direct labor costs for full-scale production of a product from the initial run of the product is

Learning curve analysis.
Linear programming.
Monte Carlo simulation.
Expected value analysis.

Which one of the following is a sales forecasting technique that can be utilized in preparing the annual profit plan?

Linear programming.
Exponential smoothing.
Queuing theory.
Program Evaluation and Review Technique (PERT).

The four components of time series data are secular trend, cyclical variation, seasonality, and random variation. The seasonality in the data can be r...

Multiplying the data by a seasonality factor.
Ignoring it.
Taking the weighted average over four time periods.
Subtracting a seasonality factor from the data.

A forecasting technique that is a combination of the last forecast and the last observed value is called

Delphi.
Least squares.
Regression.
Exponential smoothing.

As part of a risk analysis, an auditor wishes to forecast the percentage growth in next monthâ€™s sales for a particular plant using the past 30 ...

Unweighted moving average.
Exponential smoothing.
Queuing theory.
Linear regression analysis.

What are the four components of a time series?

Trend, cyclical, seasonal, and irregular.
Alpha, cyclical, seasonal, and irregular.
Alpha, cyclical, seasonal, and repetitive.
Trend, cyclical, seasonal, and repetitive.

The moving-average method of forecasting

Is a cross-sectional forecasting method.
Regresses the variable of interest on a related variable to develop a forecast.
Derives final forecasts by adjusting the initial forecast based on the smoothing constant.
Includes each new observation in the average as it becomes available and discards the oldest observation.

Violation of which assumption underlying regression analysis is prevalent in time series analysis?

Variance of error term is constant.
Error terms are independent.
Distribution of error terms is usually normal.
Expected value of error term equals zero.

Sales of big-screen televisions have grown steadily during the past 5 years. A dealer predicted that the demand for February would be 148 televisions...

148 televisions.
151 televisions.
155 televisions.
158 televisions.

Sunrise Corporation’s actual sales for May were $22,000,000, a result $600,000 greater than projected. Actual sales for June totaled $22,500,000. U...

$22,476,000
$22,296,000
$21,856,000
$21,820,000

A common characteristic of simple regression analysis, learning curve analysis, and time series analysis is that they all.

Can accommodate nonlinear behavior.
Use past data to estimate future values.
Adjust for inflation.
Establish causation.

Oakhurst manufactures goods the month before they are sold and uses a 3-month moving average to predict sales. Sales for the first 4 months of the ye...

41,333 units.
44,000 units
45,667 units.
50,000 units.

Knollwood Industries uses exponential smoothing to forecast collections of outstanding accounts receivable. The company’s credit sales are relative...

$535,000
$515,000
$472,500
$436,500

The expected monetary value of an event

Is equal to the conditional value or profit of the event.
Is equal to the payoff of the event times the probability the event will occur.
Is the profit forgone by not choosing the best alternative.
Is the absolute profit from a particular event.

Expected value in decision analysis is

A standard deviation using the probabilities as weights.
An arithmetic mean using the probabilities as weights.
The square root of the squared deviations.
A measure of the difference between the best possible outcome and the outcome of the original decision

The expected monetary value of an act is the

Sum of the conditional profit (loss) for each event.
Sum of the conditional profit (loss) for each event times the probability of each event’s occurrence.
Conditional profit (loss) for the best event times the probability of each event’s occurrence.
Revenue minus the costs for the act.

The expected value of perfect information is the

Same as the expected profit under certainty.
Sum of the conditional profit (loss) for the best event of each act times the probability of each event’s occurring.
Difference between the expected profit under uncertainty and conditional profit for the best act under certainty
Difference between the expected profit under certainty and the expected monetary value of the best act under uncertainty.

In decision theory, those uncontrollable future events that can affect the outcome of a decision are

Payoffs.
States of nature.
Probabilities.
Nodes.

The Booster Club at Blair College sells hot dogs at home basketball games. The group has a frequency distribution of the demand for hot dogs per game...

Is closest to the expected demand.
Has the greatest probability of occurring.
Has the greatest expected opportunity cost.
Has the greatest expected monetary value.

A company is simulating the actions of a government agency in which 50% of the time a recall of a product is required, 40% of the time only notificat...

1-40
40-90
61-100
11-60

Sweivel Company is preparing its budget and, taking into consideration the recent pace of economic recovery, has developed several sales forecasts an...

Expected value analysis.
Continuous probability simulation.
Exponential distribution analysis.
Sensitivity analysis.

Bosworth, Inc., sells its product for $100 per unit while incurring variable operating costs of $60 per unit and $25,000,000 of fixed operating costs...

$32,800,000
$8,200,000
$7,800,000
$7,000,000

Brown Veterinary Clinic schedules weekend staff based on the number of animals being boarded. The clinic has a total of four staff members available ...

1
2
3
4

A quantitative technique useful in projecting a firm’s sales and profits is

Probability distribution theory.
Gantt charting.
Learning curves.
Queuing theory.

A widely used approach that managers use to recognize uncertainty about individual items and to obtain an immediate financial estimate of the consequ...

Expected value analysis.
Learning curve analysis.
Sensitivity analysis.
Regression analysis

Through the use of decision models, managers thoroughly analyze many alternatives and decide on the best alternative for the company. Often, the actu...

Expected value analysis.
Linear programming.
Program Evaluation Review Technique (PERT)
Sensitivity analysis.

The process of evaluating the effect of changes in variables such as sales price or wage rates on the optimum solution in a linear programming applic...

Iterative analysis.
Regression analysis.
Sensitivity analysis.
Matrix analysis.

Tarleton Company operates several retail stores. To support the company’s long-term goals, operating income should be at least 10% of sales. Tarlet...

Increase the advertising budget by $25,000, which would increase sales units by 5%.
Raise the selling price by 2%, which would reduce sales units by 2% but save $50,000 in operating costs.
Require all managers to reduce their budgeted operating fixed costs by 3%.
Wait until the end of next year’s first quarter to re-evaluate its situation.

Which of the following steps in the strategic management process should be completed first?

Translate objectives into goals.
Determine actions to achieve goals.
Develop performance measures.
Create a mission statement.

A firmâ€™s statement of broad objectives or mission statement should accomplish all of the following except

Outlining strategies for technological development, market expansion, and product differentiation.
Defining the purpose of the company.
Providing an overall guide to those in high-level, decision-making positions
Stating the moral and ethical principles that guide the actions of the firm.

Intensity of rivalry among existing firms in an industry increases when I. Products are relatively undifferentiated II. Consumer switching costs are...

I only.
II only.
Both I and II.
Neither I nor II.

Structural considerations affecting the threat of substitutes include all of the following except

Relative prices
Brand identity
Cost of switching to substitutes.
Customers’ inclination to use a substitute.

A corporation is performing research to determine the feasibility of entering the truck rental industry. The decision to enter the market is most lik...

The fixed costs are high in relation to variable costs in the truck rental industry.
Buyers view the product as differentiated.
The market is dominated by a small consortium of buyers.
Buying firms enjoy large profit margins on their end products

Which industry factor does not contribute to competitive rivalry?

Price-cutting, large advertising budgets, and frequent introduction of new products.
A firm’s growth must come from winning other firms’ customers.
High costs of customers switching suppliers.
High fixed costs relative to variable costs.

Which condition does not increase the threat of new competitor entry into the industry?

Strong brand identity.
Existing firms do not enjoy the cost advantages of vertical integration.
Few proprietary product differences.
Low capital requirements.

The concurrent action of basic competitive forces as defined by Porter’s model determines the

Long-term profitability and the competitive intensity of the industry.
Entrance barriers that potential players must face to get into the industry.
Rivalry inside the industry.
Nonvalue-adding activities that should be eliminated.

Which factor most likely encourages entry into an existing market?

Governmental subsidies for new investors.
High product differentiation, principally produced by trademarks.
Knowledge of the industry, with high investments in development.
Low fixed exit costs.

Which of the following is a favorable condition for a firm competing in a profitable, expanding industry?

The firm does not have a strong customer base.
A few suppliers who can restrict supply.
Competitors find it difficult to acquire the firm’s customers.
The firm has high costs relative to other firms in the industry.

Michael E. Porterâ€™s competitive strategies model includes an analysis of the competitive forces that determine the attractiveness of an indust...

I and II only.
I and III only.
II, III, and IV only.
I, II, III, and IV.

Which factor increases the threat of entry into an industry?

Economies of scale are significant.
Capital requirements are high
An industry leader may retaliate against a new entrant.
Exit barriers are low.

A manufacturing company produces plastic utensils for a particular segment at the lowest possible cost. The company is pursuing a cost

Leadership strategy.
Focus strategy.
Differentiation strategy.
Containment strategy.

What operations strategy is most likely to be adopted when the product sold by an organization is a commodity and the market is very large?

Flexibility strategy.
Quality strategy
Service strategy.
Cost strategy.

During the growth stage of a product’s life cycle,

The quality of products is poor.
New product models and features are introduced.
There is little difference between competing products.
The quality of the products becomes more variable and products are less differentiated.

In a productâ€™s life cycle, the first symptom of the decline stage is a decline in the

Firmâ€™s inventory levels.
Productâ€™s sales.
Productâ€™s production cost.
Productâ€™s prices.

Jack-O-Lantern, Inc., is trying to decide which competitive strategy it should try to implement. Since the company has recently started producing Hal...

Cost leadership.
Differentiation.
Cost focus.
Focused differentiation.

A strategic business unit (SBU) has a high relative market share (RMS) and a low market growth rate (MGR). According to the growth-share matrix for c...

Star.
Question mark.
Cash cow.
Dog.

In the Boston Consulting Group (BCG) growth-share matrix, which strategic business units are strong competitors in high growth markets but usually ha...

Cash cows.
Question marks.
Dogs.
Stars.

A strategic business unit (SBU) has a low relative market share (RMS) and a high market growth rate (MGR). According to the portfolio model for compe...

Star
Question mark.
Cash cow
Dog

According to the growth-share matrix approach developed by the Boston Consulting Group, a harvest strategy is most likely to be used for SBUs that ar...

Question marks that may become stars.
Strong cash cows.
Weak cash cows.
Dogs that reduce the firm’s profits.

According to the Boston Consulting Group’s portfolio model for competitive analysis, the strategy for a strong cash cow should be

Harvest.
Divest.
Hold.
Build.

A typical life cycle progression for a successful firm within the Boston Consulting Group’s growth-share matrix is

Star, question mark, cash cow, dog.
Question mark, star, cash cow, dog.
Star, cash cow, question mark, dog.
Question mark, cash cow, star, dog.

The balanced scorecard provides an action plan for achieving competitive success by focusing management attention on critical success factors. Which ...

Competitor business strategies.
Financial performance.
Internal business processes.
Employee innovation and learning.

Using the balanced scorecard approach, an organization evaluates managerial performance based on

A single ultimate measure of operating results, such as residual income.
Multiple financial and nonfinancial measures.
Multiple nonfinancial measures only.
Multiple financial measures only.

On a balanced scorecard, which of the following would not be an example of a customer satisfaction measure?

Market share.
Economic value added.
Response time.
Customer retention.

On a balanced scorecard, which is more of an internal process measure than an externalbased measure?

Cycle time.
Profitability.
Customer satisfaction.
Market share.

Consider the following categories of performance measures. I. Profitability measures. II. Customer-satisfaction measures. III. Efficiency, quality,...

I only.
I and II.
II and III.
I, II, III, and IV.

Which one of the following statements about a balanced scorecard is incorrect?

It seeks to address the problems associated with traditional financial measures used to assess performance.
The notion of value chain analysis plays a major role in the drawing up of a balanced scorecard.
It relies on the perception of the users with regard to service provided.
It is directly derived from the scientific management theories.

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Analysis and Forecasting Techniques MCQs