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22 January, 07:33

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Determine the monthly production rate if a level strategy is selected with the goal of ending the fourth month with 100 units in inventory.

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  1. 22 January, 07:58
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    325 units per month

    Explanation:

    Cumulative demand for next four months:

    = 200 + 400 + 250 + 350

    = 1,200

    Total production requirement:

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

    = 1,200 - 0 + 100

    = 1,300

    At level strategy, monthly production rate will be uniformly.

    Therefore,

    the monthly production rate will be as follows:

    = 1,300 : 4

    = 325 units per month
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