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Free IIA IIA-CIA-Part3 Exam Braindumps (page: 56)

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PDF with 1555 Questions

Quality control programs employ many tools for problem definition and analysis. A scatter diagram is one of these tools. The objective of a scatter diagram is to:

  1. Display a population of items for analysis.
  2. Show frequency distribution in graphic form.
  3. Divide a universe of data into homogeneous groups.
  4. Show the vital trend and separate trivial items.

Answer(s): A

Explanation:

The objective of a scatter diagram is to demonstrate correlations. Each observation is represented by a dot on a graph corresponding to a particular value of X the independent variable) and Y the dependent variable).



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

  1. Variance of error term is constant.
  2. Error terms are independent.
  3. Distribution of error terms is normal.
  4. Expected value of error term equals zero.

Answer(s): B

Explanation:

Time series analysis is a regression model in which the independent variable is time. In time series analysis, the value of the next time period is frequently dependent on the value of the time period before that. Hence, the error terms are usually correlated or dependent on the prior period;
i.e., they are characterized by autocorrelation serial correlation).



The moving-average method of forecasting:

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

Answer(s): D

Explanation:

The simple moving-average method is a smoothing technique that uses the experience of the past N periods through time period t) to forecast a value for the next period. Thus, the average includes each new observation and discards the oldest observation. The forecast formula for the next period for time period t+1) is the sum of the last N observations divided by N.



As part of a risk analysis, an auditor wishes to forecast the percentage growth in next month's sales for a particular plant using the past 30 months' sales results. Significant changes in the organization affecting sales volumes were made within the last 9 months. The most effective analysis technique to use would be

  1. Unweighted moving average.
  2. Exponential smoothing.
  3. Queuing theory.
  4. Linear regression analysis.

Answer(s): B

Explanation:

Under exponential smoothing, each forecast equals the sum of the last observation times the smoothing constant, plus the last forecast times one minus the constant. Thus, exponential means that greater weight is placed on the most recent data, with the weights of all data falling off exponentially as the data age. This feature is important because of the organizational changes that affected sales volume.



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