Question

Midland Company buys tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock equal to the tiles needed for three months’ sales. The tiles cost $1.00 each and must be paid for in cash. The company has 28,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months:

January	12,100
February	18,200
March	13,400
April	13,200
May	9,500
June	7,800

Required:

a & b. Estimate purchases (in units) and cash required to make purchases in January, February, and March

Answer 1

rate positively ..

	Month	January	February	March	April	May	June
i	Estimated sales	12100	18200	13400	13200	9500	7800
ii	Beginnig inventory	28000	28900	25400
iii	Ending inventory (next 3 month sales)	44800	36100	30500
iv=i+iii-ii	Purchase for the month	28900	25400	18500
v	Total cost = iv*1	28900	25400	18500
	Therefore	January	February	March
	Purchase in unit	28900	25400	18500
	Purchase in $	28900	25400	18500