Question

The Donald Fertilizer Company produces industrial chemical fertilizers. The projected manufacturing requirements (in thousands of gallons) for the next four quarters are 80, 50, 80, and 130, respectively. A level workforce is desired, relying only on anticipation inven-tory as a supply option. Stockouts and backorders are to be avoided, as are overtime and undertime.

Determine the quarterly production rate required to meet total demand for the year, and minimize the anticipation inventory that would be left over at the end of the year. Beginning inventory is zero.

Answer 1

To meet the total demand for the year and minimize anticipation inventory for the Donald Fertilizer Company, the quarterly production rates should be 80, 50, 80, and 130 thousand gallons, respectively.

Step-by-step explanation:

To determine the quarterly production rate required to meet the total demand for the year and minimize anticipation inventory, we need to calculate the production rate for each quarter. The projected manufacturing requirements for the next four quarters are 80, 50, 80, and 130 thousand gallons, respectively. Since we want to maintain a level workforce and rely only on anticipation inventory as a supply option, we can calculate the cumulative production requirements for each quarter:

Quarter 1: 80

Quarter 2: 80 + 50 = 130

Quarter 3: 130 + 80 = 210

Quarter 4: 210 + 130 = 340

Therefore, the quarterly production rates required to meet the total demand for the year would be:

Quarter 1: 80 thousand gallons

Quarter 2: (130-80) = 50 thousand gallons

Quarter 3: (210-130) = 80 thousand gallons

Quarter 4: (340-210) = 130 thousand gallons