Question

Read the statements below. For each of the statements, select TRUE, FALSE or NEI (Not Enough Information) accordingly.

When evaluating different forecasting methods, the best option is always the one that gives you the least cumulative forecasted error.  TrueFalseNEI

The CFE is useful in assessing bias in a forecast.  TrueFalseNEI

A value greater than 15000 for a Mean Absolute Deviation should be always considered as a large error.  TrueFalseNEI

In the SMA, a shorter moving average period produces more oscillations but it more closely follows the actual trend.  TrueFalseNEI

Using a WMA with n=4 will perform better than a SMA with n=4.  TrueFalseNEI

For Exponential Smoothing, if actual demands are stable you should use a large α to lessen effects of short-term changes in demand.   TrueFalseNEI

Answer 1

When evaluating different forecasting methods, the best option is always the one that gives you the least cumulative forecasted error.  

Answer is "False".

This statement is false because a single forecast with huge bias or forecast error can send cumulative forecasted error for a toss giving wrong interpretation.

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The CFE is useful in assessing bias in a forecast.  

Answer is "True".

CFE (cumulative forecast error) is the measure of bias or error in the forecast.

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A value greater than 15000 for a Mean Absolute Deviation should be always considered as a large error.  

Answer is "False"

Mean Absolute Deviation (MAD) is based on the absolute difference between Actual and forecast numbers. So MAD value greater than 15000 can be normal if the forecast and actual numbers are quite large.

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In the SMA, a shorter moving average period produces more oscillations but it more closely follows the actual trend.

Answer is "True"

Shorter moving average period react quickly producing more oscillation follow actual trend more closely.