Question

1. Consider the following history of supply and demand transactions for a particular part:

Month	Number of items Received	Demand during Month
January	50	220
February	180	200
March	150	70

The starting inventory at the beginning of January is 100 units.

1. Assuming excess demand is back-ordered, what is the number of back-orders in March?

Answer:

2. (Assuming excess demand is lost, what is the number of lost sales in March?

Answer:

(show your calculations)

3. Assuming excess demand is lost, what is the closing inventory at the end of March?

Answer:

Answer 1

Answer;

Given That,

Lets us consider the following history of supply and demand transactions for a particular part:

Month	Number of items Received	Demand during Month
January	50	220
February	180	200
March	150	70

Now,

At the end of March, we determination consume a summary of total demand and items received.

Total items received + on hand = 100 + 50 + 180 + 150 = 480

Total demand till March = 220 + 200 + 70 = 490

Assuming excess demand is back-ordered, what is the number of back-orders in March?

If the excess demand is back-ordered

The number of back-orders in March = 490-480 = 10

Assuming excess demand is lost, what is the number of lost sales in March?

If the excess demand is lost then there will be loss in January and February.

However, in March the lost sales will be none.

This is because 150 > 70 and losses are not carried forward. In march there will be no loss.

Assuming excess demand is lost, what is the closing inventory at the end of March?

If excess demand is lost then February will have 0 inventory.

This means the end inventory in March will be 150-70 = 80 units