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A/F Ratio for Demand Forecast: A firm is considering the use of the A/F method in the upcoming season to forecast their demand and to choose order quantities. They collected data from last year's products in the category - See the table. Based on these data, they plan to fit a Normal distribution to each of the current products. The mean of the Normal will equal their forecast and the standard deviation will equal 28% of their forecast. What is likely to be a problem with their approach to the A/F method? Choose the best answer. Product Forecast A 800 B 2000 1800 D Order quantity 1000 1500 2000 2200 2400 2600 5000 12000 16500 Actual Sales 1000 989 1800 2200 1978 2600 4000 6500 16500 1900 2000 2200 5000 9000 12000 Actual Sales/ Forecast 1.25 0.49 1.00 1.16 0.99 1.18 0.80 0.72 1.38 E F G . - Average of Actual/Forecast = Std deviation of Actual/Forecast = 1.00 0.28 O They shouldn't use the Normal distribution to model demand and should instead use the empirical demand distribution. There must be something wrong with their data because the average A/F ratio is rarely equal to 1 (in which case it is unbiased). They did not sort their A/F ratios from least to greatest. Their order quantities are likely to be too low because they didn't keep track of actual demand. O They need more data because at least 20 observations are needed to implement this method O They need to have more than one forecast per product because they need to estimate standard deviations A/F Ratio for Demand Forecast: A firm is considering the use of the A/F method in the upcoming season to forecast their demand and to choose order quantities. They collected data from last year's products in the category - See the table. Based on these data, they plan to fit a Normal distribution to each of the current products. The mean of the Normal will equal their forecast and the standard deviation will equal 28% of their forecast. What is likely to be a problem with their approach to the A/F method? Choose the best answer. Product Forecast A 800 B 2000 1800 D Order quantity 1000 1500 2000 2200 2400 2600 5000 12000 16500 Actual Sales 1000 989 1800 2200 1978 2600 4000 6500 16500 1900 2000 2200 5000 9000 12000 Actual Sales/ Forecast 1.25 0.49 1.00 1.16 0.99 1.18 0.80 0.72 1.38 E F G . - Average of Actual/Forecast = Std deviation of Actual/Forecast = 1.00 0.28 O They shouldn't use the Normal distribution to model demand and should instead use the empirical demand distribution. There must be something wrong with their data because the average A/F ratio is rarely equal to 1 (in which case it is unbiased). They did not sort their A/F ratios from least to greatest. Their order quantities are likely to be too low because they didn't keep track of actual demand. O They need more data because at least 20 observations are needed to implement this method O They need to have more than one forecast per product because they need to estimate standard deviations