A company currently has 100 items in inventory. The demand for the next four months is...

A company currently has 100 items in inventory. The demand for the next four months is 500, 800, 900, and 300 units. Determine the monthly production rate if a level strategy is selected with the goal of ending the fourth month with 400 units in inventory.

	a.	500 units/month
	b.	700 units/month
	c.	900 units/month
	d.	1100 units/month

Solutions

Expert Solution

Cumulative demand for next four months = 500 + 800 + 900 + 300 = 2500

Total production requirement

= Cumulative demand for next four months – Beginning inventory +Ending inventory

= 2500 – 100 + 400

= 2800

At level strategy, monthly production rate will be uniformly.

Therefore , monthly production rate = 2800 / 4 = 700 units

MONTHLY PROUCTION RATE : b ) 700 UNITS/MONTH

keosha answered 1 year ago

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