You Are Hired as a Consultant to Advise a Small

question 52

Multiple Choice

You are hired as a consultant to advise a small firm on forecasting methodology. Based on your research, you find the company has a MAD of 3. It wants to have a 99.7 percent control limits on its forecasting system. Its most recent tracking signal value is 15. What should be your report to the company?

• A) The forecasting model is operating acceptably.
• B) The forecasting model is out of control and needs to be corrected.
• C) The MAD value is incorrect.
• D) The upper control value is less than 20.
• E) The company is using an inappropriate forecasting methodology.