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A company has a sales forecast for the following five months as shown in the table. If they have a beginning inventory of 225
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Answer #1

For level production plan;

Production per Month = (Sum of total forecast for all period – opening inventory - ending inventory)/ number of Months

Where,

Total forecast for all period = 825 + 600 + 650 + 550 + 475 = 3100 units

Opening inventory = 225 units

Ending inventory = 0

Number of Months = 5

Therefore,

Production per Month = (3100 – 225 + 0)/5

= 2,875/5 = 575 units per month

Production under level plan is 575 units; therefore correct answer is option B. 575 units per month

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