Question

Question 3 What is the ending inventory level for April in the production plan shown in the table? All entries in the table are in terms of sales units. Regular Overtime Ending Month Forecast Production Production 300 500 300 325 400 25 25 A) 100 Units B) 125 Units C) 150 Units D) 75 Units Question 4: A company has a sales forecast for the following five months as shown in the table. If they have a beginning inventory of 350 units, what amount should be produced under a level plan in order for them to have an ending inventory of zero units at the end of the five month period? Month Forecast 525 600 March 750 Ma A) 610 units per month B) 595 units per month C) 640 units per month D) 580 units per month

Answer 1

QUESTION 3	B	C	D	E	F	G	H
	month	Sales forecast	regular production	overtime production	ending inventory	carry over to next month
3	January	250	250	0	0	0
4	February	200	300	0	100	100	G3+F4
5	March	300	325	25	50	150	G4+F5
6	April	500	400	25	-75	75	G5+F6
	ANSWER	D)75 UNITS
QUESTION 4
	month	sales forecast	opening stock	production	closing	cumulative closing
13	january	525	350	610	435	435
14	february	600	0	610	10	445
15	March	650	0	610	-40	405
16	april	750	0	610	-140	265
17	May	875	0	610	-265	0
18	total forecast sales	3400	SUM(C13:C17)
19	number of month	5
20	opening stock	350	(given)
21	adjusted production required to meet the demand ( opening stock is sold in the month of January itself)	3050	C18-C20	fifo basis
22	average adjusted production required per month	610	C21/C19
	ANSWER	a) 610 units pm