Q&A Hero

Q: Computer monitoring of tracking signals and self-adjustment if a signal passes a preset limit is characteristic of: A) exponential smoothing including trend. B) adaptive smoothing. C) trend projection. D) focus forecasting. E) multiple regression analysis.

Q: Creating a partnership allows a business to pool the managerial talents and capital of those individuals joining together as partners. a. True b. False

Q: The tracking signal is the: A) standard error of the estimate. B) absolute deviation of the last period's forecast. C) MAD. D) ratio of cumulative error / MAD. E) MAPE.

Q: Partners always share profits and losses equally. a. True b. False

Q: The last four weekly values of sales were 80, 100, 105, and 90 units. The last four forecasts were 60, 80, 95, and 75 units. These forecasts illustrate: A) qualitative methods. B) adaptive smoothing. C) slope. D) bias. E) trend projection.

Q: A partnership agreement states explicitly the rights and duties of partners with each party assuming joint and several liability. a. True b. False

Q: Focus forecasting tries a variety of computer models and selects the best one for a particular application.

Q: A management team is often stronger than an individual entrepreneur because it provides a diversity of skills and assurance of continuity. a. True b. False

Q: In the term "B corporation," the B stands for "business." a. True b. False

Q: If a forecast is consistently greater than (or less than) actual values, the forecast is said to be biased.

Q: There are no limits on the owner's personal liability in a sole proprietorship. a. True b. False

Q: Arnold Tofu owns and operates a chain of 12 vegetable protein "hamburger" restaurants in northern Louisiana. Sales figures and profits for the stores are provided in the table below. Sales are given in millions of dollars; profits are in hundreds of thousands of dollars. Calculate a regression line for the data. What is your forecast of profit for a store with sales of $24 million? $30 million? Store Profits Sales 1 14 6 2 11 3 3 15 5 4 16 5 5 24 15 6 28 18 7 22 17 8 21 12 9 26 15 10 43 20 11 34 14 12 9 5

Q: Partners must contribute capital or assets to form a partnership. a. True b. False

Q: An innovative restaurateur owns and operates a dozen "Ultimate Low-Carb" restaurants in northern Arkansas. His signature item is a cheese-encrusted beef medallion wrapped in lettuce. Sales (x, in millions of dollars) is related to Profits (y-hat, in hundreds of thousands of dollars) by the regression equation y-hat = 8.21 + 0.76 x. What is your forecast of profit for a store with sales of $40 million? $50 million?

Q: Sometimes small business board members are given company stock in lieu of compensation. a. True b. False

Q: Explain, in your own words, the meaning of the coefficient of determination.

Q: The LLC differs from the C corporation in that the LLC avoids financial complications from double taxation. a. True b. False

Q: Distinguish a dependent variable from an independent variable.

Q: S corporations can have nonresident alien stockholders but no more than 50 stockholders. a. True b. False

Q: The ________ measures the strength of the relationship between two variables.

Q: Incorporation will not protect a firms owners from liability if it is used to perpetrate a fraud, skirt a law, or commit some wrongful act. a. True b. False

Q: Linear regression is known as a(n) ________ model because it incorporates variables or factors that might influence the quantity being forecast.

Q: By utilizing the experience of a board of directors, the chief executive of a small corporation may have to relinquish active control of its operations. a. True b. False

Q: If two variables were perfectly correlated, what would the coefficient of correlation r equal? A) 0 B) -1 C) 1 D) B or C E) none of the above

Q: The degree or strength of a relationship between two variables is shown by the: A) alpha. B) mean. C) mean absolute deviation. D) coefficient of correlation. E) cumulative error.

Q: An ownership interest does not automatically confer a right to act for or to share in the management of a corporation. a. True b. False

Q: A fundamental distinction between trend projection and linear regression is that: A) trend projection uses least squares while linear regression does not. B) only linear regression can have a negative slope. C) in trend projection the independent variable is time; in linear regression the independent variable need not be time, but can be any variable with explanatory power. D) trend projection can be a function of several variables, while linear regression can only be a function of one variable. E) trend projection uses two smoothing constants, not just one.

Q: A partnership reports the income it earns to the Internal Revenue Service, but the partnership itself does not pay any taxes. a. True b. False

Q: A nonprofit corporation can be for civic, educational, charitable, or religious purposes and must pass the organizational test of not making a profit. a. True b. False

Q: Regression lines graphically depict "cause-and-effect" relationships.

Q: In a regression equation where y-hat is demand and x is advertising, a coefficient of determination (R2) of .70 means that 70% of the variance in advertising is explained by demand.

Q: The concept of balance on the management team means that the entrepreneur should not be wrapped up too much in one area, such as sales or production, but be well rounded. a. True b. False

Q: The larger the standard error of the estimate, the more accurate the forecasting model.

Q: The sole proprietorship is a business owned by two or more people but operated by only one person. a. True b. False

Q: Linear-regression analysis is a straight-line mathematical model to describe the functional relationships between independent and dependent variables.

Q: A limited partnership must have at least two general partners and one or more limited partners. a. True b. False

Q: The department manager using a combination of methods has forecast sales of toasters at a local department store. Calculate the MAD for the manager's forecast. Compare the manager's forecast against a naive forecast covering the same time period. Which is better? Month Unit Sales Manager's Forecast January 52 February 61 March 73 April 79 May 66 June 51 July 47 50 August 44 55 September 30 52 October 55 42 November 74 60 December 125 75

Q: The liability of owners is greater with a sole proprietorship than with a general partnership. a. True b. False

Q: A small family-owned restaurant uses a seven-day moving average model to determine manpower requirements. These forecasts need to be seasonalized because each day of the week has its own demand pattern. The seasonal indices for each day of the week are: Monday 0.445; Tuesday 0.791; Wednesday 0.927; Thursday 1.033; Friday 1.422; Saturday 1.478; and Sunday 0.903. Average daily demand based on the most recent moving average is 194 patrons. What is the seasonalized forecast for each day of next week?

Q: Typically strategic alliances are harder to set up than to maintain. a. True b. False

Q: The last seven weeks of demand at a new car dealer are shown below. Use a three-period weighted-moving average forecast to determine a forecast for the 8th week using weights of 3, 2, and 1 (where the most recent week receives the highest weight). (Round all forecasts to the nearest whole unit.) Calculate the MAD for this forecast (covering all weeks in which error comparisons can be made). What does the MAD indicate? Week Sales 1 25 2 30 3 27 4 31 5 27 6 29 7 30

Q: For the best success, strategic alliance partners should sign contracts with stated expectations and an easy out clause. a. True b. False

Q: An advisory board functions like a board of directors does, except that the members are compensated for their services and the company must have Directors and Officers Liability insurance. a. True b. False

Q: The quarterly sales for specific educational software over the past three years are given in the following table. Compute the four seasonal factors. YEAR 1 YEAR 2 YEAR 3 Quarter 1 1710 1820 1830 Quarter 2 960 910 1090 Quarter 3 2720 2840 2900 Quarter 4 2430 2200 2590

Q: The board of directors is elected by the stockholders of a corporation. a. True b. False

Q: Marie Bain is the production manager at a company that manufactures hot water heaters. Marie needs a demand forecast for the next few years to help decide whether to add new production capacity. The company's sales history (in thousands of units) is shown in the table below. Use exponential smoothing with trend adjustment to forecast demand for period 6. The initial forecast for period 1 was 11 units; the initial estimate of trend was 0. The smoothing constants are α = .3 and β = .3 Period Actual 1 12 2 15 3 16 4 16 5 18 6 20

Q: Entrepreneurs should base their market assessments, production schedules, inventory policies, and personnel decisions on: a. techniques of observation. b. qualitative analysis. c. intuition alone. d. the sales forecast.

Q: A seasonal index for a monthly series is about to be calculated on the basis of three years' accumulation of data. The three previous July values were 110, 135, and 130. The average over all months is 160. What is the approximate seasonal index for July?

Q: Demand for a certain product is forecast to be 8,000 units per month, averaged over all 12 months of the year. The product follows a seasonal pattern, for which the January monthly index is 1.25. What is the seasonally-adjusted sales forecast for January?

Q: Joel recently opened a neighborhood grocery. He chats briefly with each customer, carefully bags or boxes their purchases, and offers to load them into the customers cars. Joel has learned that: a. a business provides a bundle of satisfaction to its customers, not just the product they have bought. b. customer relationships are more important than profits. c. how his customers feel is just as important as their satisfaction with their purchases. d. keeping customers is easier than finding new ones.

Q: A restaurant has tracked the number of meals served at lunch over the last four weeks. The data show little in terms of trends, but do display substantial variation by day of the week. Use the following information to determine the seasonal (daily) indices for this restaurant. Week Day 1 2 3 4 Sunday 40 35 39 43 Monday 54 55 51 59 Tuesday 61 60 65 64 Wednesday 72 77 78 69 Thursday 89 80 81 79 Friday 91 90 99 95 Saturday 80 82 81 83

Q: Bennett left his job as production manager and launched his own company because he was sure his methods of making the same type of product would be more profitable and efficient. Bennett is likely to employ the __________ marketing philosophy. a. efficiency-oriented b. sales-oriented c. production-oriented d. consumer-oriented

Q: A ____ estimates how much of a product and/or service will be purchased within a market over a defined period of time. a. market forecast b. market analysis c. sales forecast d. sales analysis

Q: Use exponential smoothing with trend adjustment to forecast deliveries for period 10. Let alpha = 0.4, beta = 0.2, and let the initial trend value be 4 and the initial forecast be 200. Period Actual Demand 1 200 2 212 3 214 4 222 5 236 6 221 7 240 8 244 9 250 10 266

Q: Marketing research should be viewed as a supplement to, not a replacement for, _____. a. the observational method. b. questionnaires. c. mail surveys. d. intuitive judgement.

Q: Favors Distribution Company purchases small imported trinkets in bulk, packages them, and sells them to retail stores. The managers are conducting an inventory control study of all their items. The following data are for one such item, which is not seasonal. a. Use a trend projection to estimate the relationship between time and sales (state the equation). b. Calculate forecasts for the first four months of the next year. 1 2 3 4 5 6 7 8 9 10 11 12 Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sales 51 55 54 57 50 68 66 59 67 69 75 73

Q: The following trend projection is used to predict quarterly demand: y-hat = 250 - 2.5x, where x = 1 in the first quarter. Seasonal (quarterly) indices are Quarter 1 = 1.5; Quarter 2 = 0.8; Quarter 3 = 1.1; and Quarter 4 = 0.6. What is the seasonally adjusted forecast for the next four quarters?

Q: The _____ method is probably the oldest form of research in existence. a. questioning b. secondary research c. observational d. interpretive

Q: Using the number of births in a historical record to predict the number of driver's licenses issued in subsequent years is an example of the use of a(n) ____ variable in forecasting. a. approximating b. indirect c. surrogate d. terminating

Q: A management analyst is using exponential smoothing to predict merchandise returns at an upscale branch of a department store chain. Given an actual number of returns of 154 items in the most recent period completed, a forecast of 172 items for that period, and a smoothing constant of 0.3, what is the forecast for the next period? How would the forecast be changed if the smoothing constant were 0.6? Explain the difference in terms of alpha and responsiveness.

Q: Mary, owner of Delany Salsas, is curious to know whether the new packaging for her line of salsas is being noticed by supermarket consumers. To collect information, she passively watches shopper reactions as they pass by the Delany Salsas display. Mary is collecting ____ data through ____ methods. a. secondary/observational b. primary/questioning c. primary/observational d. secondary/questioning

Q: The last four weekly values of sales were 80, 100, 105, and 90 units, respectively. The last four forecasts (for the same four weeks) were 60, 80, 95, and 75 units, respectively. Calculate the MAD, MSE, and MAPE for these four weeks. Sales Forecast Error Error squared Pct. error 80 60 20 400 .25 100 80 20 400 .20 105 95 10 100 .095 90 75 15 225 .167

Q: Weekly sales of copy paper at Cubicle Suppliers are provided in the table below. Compute a three-period moving average and a four-period moving average for weeks 5, 6, and 7. Compute the MAD for both forecasting methods. Which model is more accurate? Forecast week 8 with the more accurate method. Week Sales (cases) 1 17 2 21 3 27 4 31 5 19 6 17 7 21

Q: Wilson is so confident of the benefits of his product, he is sure people will line up to buy it if only they knew about it. Wilson will most likely subscribe to the _______________ marketing philosophy. a. production-oriented b. sales-oriented c. consumer-oriented d. promotion-oriented

Q: Brenda is creating the marketing plan for her bakery. Many of the recipes she will use were handed down through her family and she would like to keep them secret. These recipes will be considered: a. patent-protected. b. copyrighted. c. intellectual property. d. family heirlooms.

Q: What is the forecast for May based on a weighted moving average applied to the following past demand data and using the weights: 4, 3, 2 (largest weight is for most recent data)? Nov. Dec. Jan. Feb. Mar. April 37 36 40 42 47 43

Q: To determine credit card average purchases, managers of Component City Stereo and Appliances reviewed credit card sales receipts from the previous three months. Managers are conducting marketing research by collecting and analyzing a. primary data. b. observational data. c. questioning data. d. secondary data.

Q: Given the following data, calculate the three-year moving averages for years 4 through 10. Year Demand 1 74 2 90 3 59 4 91 5 140 6 98 7 110 8 123 9 99

Q: John, a car repair shop owner, is developing the warranty and repair policies for his business. What area of the marketing strategy is he addressing? a. Promotional plan b. Product and/or service plan c. Distribution plan d. Pricing plan

Q: Weekly sales of ten-grain bread at the local organic food market are provided in the table below. Based on these data, forecast week 9 using a five-week moving average. Week Sales 1 415 2 389 3 420 4 382 5 410 6 432 7 405 8 421

Q: Meredith is opening a high end shoe store specializing in designer shoes. Which approach is probably the wisest strategy for the marketing efforts of this company? a. Unsegmented strategy since everyone wears shoes. b. Multi-segment strategy since she could concentrate on persons wanting shoes for different reasons. c. Single-segment strategy since only women with high disposable incomes would be a prospective customer. d. Bi-segment strategy since the company wont be able to sell to just one segment to survive.

Q: What is the key difference between weighted moving average and simple moving average approaches to forecasting?

Q: The risk of being the lower-cost producer of a good or service is: a. your business will fail more quickly. b. your business will generate excess cash and will incur higher taxes. c. your business will have problems keeping up with demand. d. customers will abandon your business when someone else offers a lower price.

Q: What does it mean to "decompose" a time series?

Q: In preparing a sales forecast, it is desirable to have forecasts covering the most likely, best case and _____ case scenarios. a. rapidly shifting b. pessimistic c. predominant d. worst

Q: Identify two advantages of the moving average forecasting model. Identify two disadvantages of the moving average forecasting model.

Q: Odessa is writing the marketing plan for her bed and breakfast. She has written that her market includes everyone from infants to the elderly. This is incorrect because: a. customers must have purchasing power. b. the elderly are not likely to have unsatisfied needs. c. infants cannot write. d. infants do not make buying decisions.

Q: Explain the role of regression models (time series and otherwise) in forecasting. That is, how is trend projection able to forecast? How is regression used for causal forecasting?

Q: A firm's marketing philosophy determines how strategic marketing activities are used to achieve: a. efficiency. b. customer response. c. desirable thought patterns. d. business goals.

Q: Give an example, other than a restaurant or other food-service firm, of an organization that experiences an hourly seasonal pattern. (That is, each hour of the day has a pattern that tends to repeat day after day.) Explain.