OM Pop Quiz

OM for the fortunate amongst you is Operations Management, one of the more obscure and confusing sciences you come across in your journey that is an MBA. It was customary for our professor to give us in class assignments and quizzes, yet this one tops them all.

 “Some analysts claim that forecasting using exponential smoothing is synanomous with driving while looking at the rear-view mirror. Under what conditions does this analogy hold?”

If your initial reaction was WTF, then welcome to the club. We had 10 minutes to come up with an answer to THAT. Any ideas??!! Would love to get your input prior to sharing my answer. Upon submission he read it, smiled, then claimed that he had never heard that answer before 🙂

Update:

My answer was: “This analogy only holds if you are driving in reverse, this is comparable to exponential smoothing because in order to move forward you are looking behind you. In this case to estimate where you are heading you rely on past data.”

At the time that was all I could think off … he isn’t even sure if it’s correct… but at least he found it amusing.

 Sarah: Exponential smoothing (while boring as hell) is a forecasting method that relies on using an average of previous data that keeps shifting with you; a.k.a moving average.

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8 thoughts on “OM Pop Quiz

  1. lol, your professor is a good old man who deserves to be given the good old answer and allowing him the thrill of enlightening the misleads.

    Seriously, this is called the availability bias, and has to do with human nature more than statisticians and bla bla bla.

    When driving, I look to the rear mirror, side mirrors, use my ears to sense the motorcycle in my dead zone and imagining what the road ahead will be like and make my own contingency planning.

    Nothing is absolute. No one way is the right way, so the argument will hold when they are operating in VERY stable market with VERY VERY stable growth rates.

  2. While when driving I hate looking at the mirrors as I share the car and the mirrors always needs adjustment or me just trying to look into them However what the hell is xponential smoothing ???!

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