Assume a company’s estimated sales for January, February, and March are 25,000 units, 27,000 units, and 24,000 units, respectively.

Assume a company’s estimated sales for January, February, and March are 25,000 units, 27,000 units, and 24,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month’s unit sales. What is the required production in units for January?

Solutions

Expert Solution

Particulars	No. of units
Estimated sales for January	25,000
Add: Desired ending finished goods inventory (27,000 units x 15%)	4,050
Total requirements	29,050
Less: Beginning ending finished goods inventory (25,000 units x 15%)	3,750
Required production in units for January	25,300

Required production in units for January = 25,300 units

DEEPIKA GOYAL answered 1 year ago

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