Forecasting

S K Mondal

Chapter 1

IES-4.

Which one of the following forecasting techniques is most suitable

for making long range forecasts?
[IES-2005]
(a) Time series analysis
(b) Regression analysis
(c) Exponential smoothing
(d) Market Surveys

IES-5.

Which one of the following methods can be used for forecasting

when a demand pattern is consistently increasing or decreasing?
(a) Regression analysis
(b) Moving average
[IES-2005]
(c) Variance analysis
(d) Weighted moving average

IES-6.

Which one of the following statements is correct?

[IES-2003]
(a) Time series analysis technique of forecasting is used for very long range
forecasting
(b) Qualitative techniques are used for long range forecasting and
quantitative techniques for short and medium range forecasting
(c) Coefficient of correlation is calculated in case of time series technique
(d) Market survey and Delphi techniques are used for short range
forecasting

IES-7.

Given T = Underlying trend, C = Cyclic variations within the trend,

S = Seasonal variation within the trend and R = Residual, remaining
or random variation, as per the time series analysis of sales
forecasting, the demand will be a function of:
[IES-1997]
(a) T and C
(b) R and S
(c) T, C and S
(d) T, C, S and R

IES-8.

Which one of the following methods can be used for forecasting the
sales potential of a new product?
[IES-1995]
(a) Time series analysis
(b) Jury of executive opinion method
(c) Sales force composite method
(d) Direct survey method

IES-9.

Match List-I with List-II and

codes given below the lists:
List-I
A. Decision making under 1.
complete certainty
B. Decision making under 2.
risk
C. Decision making under 3
complete uncertainly
D. Decision making based on 4.
expert opinion
Codes:
A
B
C
(a)
3
4
1
(c)
3
4
2

IES-10.

select the correct answer using the

[IES-2001]
List-II
Delphi approach
Maximax criterion
Transportation mode
Decision tree
D
2
1

(b)
(d)

A
4
4

B
3
3

C
2
1

D
1
2

Assertion (A): Moving average method of forecasting demand gives

an account of the trends in fluctuations and suppresses day-to-day
insignificant fluctuations.
[IES-2009]
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Forecasting

S K Mondal

Chapter 1

Reason (R): Working out moving averages of the demand data

smoothens the random day-to-day fluctuations and represents only
significant variations.
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is NOT the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
IES-11.

Which one of the following is a qualitative technique of demand

forecasting?
[IES-2006]
(a) Correlation and regression analysis
(b) Moving average method
(c) Delphi technique
(d) Exponential smoothing

IES-12.

Match List-I (Methods) with List-II (Problems) and select the correct
answer using the codes given below the lists:
[IES-1998]
List-I
List-II
A. Moving average
1. Assembly
B. Line balancing
2. Purchase
C. Economic batch size
3. Forecasting
D. Johnson algorithm
4. Sequencing
Codes:
A
B
C
D
A
B
C
D
(a)
1
3
2
4
(b)
1
3
4
2
(c)
3
1
4
2
(d)
3
1
2
4

IES-13.

Using the exponential smoothing method of forecasting, what will

be the forecast for the fourth week if the actual and forecasted
demand for the third week is 480 and 500 respectively and = 02?
[IES-2008]
(a) 400
(b) 496
(c) 500
(d) 504

IES-14.

The demand for a product in the month of March turned out to be 20

units against an earlier made forecast of 20 units. The actual
demand for April and May turned to be 25 and 26 units respectively.
What will be the forecast for the month of June, using exponential
smoothing method and taking smoothing constant as 0.2?
[IES-2004]
(a) 20 units
(b) 22 units
(c) 26 units
(d) 28 units

IES-15.

A company intends to use exponential smoothing technique for

making a forecast for one of its products. The previous year's
forecast has been 78 units and the actual demand for the
corresponding period turned out to be 73 units. If the value of the
smoothening constant is 0.2, the forecast for the next period will
be:
[IES-1999]
(a) 73 units
(b) 75 units
(c) 77 units
(d) 78 units

IES-16.

It is given that the actual demand is 59 units, a previous forecast 64

units and smoothening factor 0.3. What will be the forecast for next
period, using exponential smoothing?
[IES-2004]
(a) 36.9 units
(b) 57.5 units
(c) 60.5 units
(d) 62.5 units

IES-17.

Consider the following statements:

Exponential smoothing
1. Is a modification of moving average method
2. Is a weighted average of past observations
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[IES 2007]

Forecasting

S K Mondal

Chapter 1

3. Assigns the highest weight age to the most recent observation

Which of the statements given above are correct?
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1 and 3 only
IES-18.

In a forecasting situation, exponential smoothing with a smoothing

constant = 0.2 is to be used. If the demand for nth period is 500 and
the actual demand for the corresponding period turned out to be
450, what is the forecast for the (n + 1)th period?
[IES-2009]
(a) 450
(b) 470
(c) 490
(d) 500

IES-19.

Consider the following statement relating to forecasting: [IES 2007]

1. The time horizon to forecast depends upon where the product
currently lies its life cycle.
2. Opinion and judgmental forecasting methods sometimes
incorporate statistical analysis.
3. In exponential smoothing, low values of smoothing constant,
alpha result in more smoothing than higher values of alpha.
Which of the statements given above are correct?
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 1 and 3 only
(d) 2 and 3 only

IES-20.

Which one of the following statements is not correct for the

exponential smoothing method of demand forecasting?
[IES-2006]
(a) Demand for the most recent data is given more weightage
(b) This method requires only the current demand and forecast demand
(c) This method assigns weight to all the previous data
(d) This method gives equal weightage to all the periods
Match List-I (Activity) with List-II (Technique) and select the
correct answer using the code given below the lists:
[IES-2005]
List-I
List-II
A. Line Balancing
1. Value analysis
B. Product Development
2. Exponential smoothing
C. Forecasting
3. Control chart
D. Quality Control
4. Selective control
5. Rank position matrix
Codes:
A
B
C
D
A
B
C
D
(a)
2
1
4
3
(b)
5
3
2
1
(c)
2
3
4
1
(d)
5
1
2
3

IES-21.

IES-22.

For a product, the forecast for the month of January was 500 units.
The actual demand turned out to be 450 units. What is the forecast
for the month of February using exponential smoothing method
with a smoothing coefficient = 0.1?
[IES-2005]
(a) 455
(b) 495
(c) 500
(d) 545

IES-23.

Which of the following is the measure of forecast error?

(a) Mean absolute deviation
(b) Trend value
(c) Moving average
(d) Price fluctuation
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[IES-2009]

Forecasting

S K Mondal

Chapter 1

Previous 20-Years IAS Questions

IAS-1.

For sales forecasting, pooling of expert opinions is made use of in

(a) Statistical correlation
(b) Delphi technique
[IAS-1996]
(c) Moving average method
(d) Exponential smoothing

IAS-2.

To meet short range changes in demand of a product, which of the

following strategies can be considered?
[IAS-2004]
1. Overtime
2. Subcontracting
3. Building up inventory
4. New investments
Select the correct answer from the codes given below:
(a) 1, 2 and 3
(b) 1, 3 and 4
(c) 2 and 3
(d) 1 and 2

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Forecasting

S K Mondal

Chapter 1

Answers with Explanation (Objective)

Previous 20-Years GATE Answers
GATE-1. Ans. (d) Moving, average, Exponential moving average is used for short range.
Regression is used for short and medium range.
Delphi is used for long range forecasting.
GATE-2. Ans. (d)
GATE-3. Ans. (d)
GATE-4. Ans. (d)
GATE-5. Ans. (d) dn1 =12000, Fn1 = 10275, Fn = ?
According to single exponential smoothing method
Fn = dn 1 + (1 ) Fn 1 = 0.25 12000 + 0.75 10275 = 10706.25
GATE-6. Ans. (c) Using simple exponential smoothing, new forecast = Old forecast +
(Actual old forecast) and forecast using a three period moving average =
(880 + 870 + 890)/3 and equate.
GATE-7. Ans. (c) Use new forecast = old forecast + (actual demand old forecast)
GATE-8. Ans. (b) Let expected number of sales in the next month = ut
ut = st + (1 ) st 1 + (1 ) st 2 + (1 ) st 3
2

where st = sales for the t period and so on.

ut = 0.4 95 + 0.4 0.6 82 + 0.4 ( 0.6 ) 68 + 0.4 ( 0.6 ) 70 = 73.52
2

GATE-9 Ans. (b)

Period

Xt

14.0
100.0

15.00
100.00

16.000
100.000

Ft

75.0

87.50

93.750

( Xt Ft )

25.0

12.50

6.250

( Xt Ft )

12.5

6.25

3.125

Ft+1

87.5

93.75

96.875

625

156.25

39.0625

( X t Ft )

( Xt Ft )

Mean squared error, MSE =

820.31
820.31
= 273.44
3

GATE-10. Ans. (d)

GATE-11. Ans. (a) Sum of absolute deviation
= (D1 F1) + (D2 F2) + (D3 F3) + (D4 F4) + (D5 F5)
= (10 6.9 2.9x1) + (13 6.9 2.9x2) + (15 6.9 2.9x3) + .

Previous 20-Years IES Answers

IES-1. Ans. (c)
IES-2. Ans. (d) Correlation and Regression method is used for short and medium range
forecasting.
IES-3. Ans. (b)
IES-4. Ans. (d)
IES-5. Ans. (a)
IES-6. Ans. (b)
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