Final answer:
To calculate planned production when beginning inventory is 100 units and ending inventory is desired to be 150 units, one must know the total demand. Economies of scale indicate a reduction in average cost per unit with increased production up to a certain point, as demonstrated by different production plants manufacturing toaster ovens and alarm clocks at varying costs.
Step-by-step explanation:
The student's question concerns the calculation of planned production and ending inventory for a given period, taking into account the beginning inventory and economies of scale within different production plants. To calculate planned production when beginning inventory is 100 units and ending inventory is desired to be 150 units, one would need the total demand during the period, which is not provided in the question. Assuming that total demand and other production details were known, one could calculate the necessary production quantity by adding the desired ending inventory to total demand and then subtracting the beginning inventory.
Economies of scale refer to the cost advantage that arises with increased output of a product. Factories that produce larger quantities can spread the fixed costs over more units, thereby reducing the average cost per unit. This is illustrated in the examples given, where larger factories (M, L, and V) can produce goods at lower average costs than smaller ones (S), up to a certain output level. After that level is reached, increasing the size of the plant does not result in lower average costs.
For example, plant M has an average cost of production of $20 per toaster oven, while plant L produces at $10 per toaster oven due to economies of scale. However, the economies of scale end at an output level of 150, beyond which no additional average cost savings are observed, as shown by the example of plant V's cost remaining at $10 per toaster oven.