Question

Livingston Fabrication has created the following aggregate plan for the next five months: August September October November December Forecasted Demand (units of finished goods): 1,500,000 1,500,000 2,000,000 3,000,000 500,000 Production Plan: 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Assume that Livingston will have nothing in inventory at the end of July. Livingston employs 1,000 production assembly workers and it takes one production assembly worker 5 minutes to assemble one unit of finished good. (The unit is complete at that point.) Each production assembly worker can provide 150 hours of assembly time a month without requiring overtime pay. What will be ending inventory for the month of September?

Answer 1

Livingston Fabrication

The ending inventory for the month of September is:

= 600,000 units.

Step-by-step explanation:

a) Data and Calculations:

August September October November December

Forecasted Demand (units of

finished goods): 1,500,000 1,500,000 2,000,000 3,000,000 500,000

Production Plan: 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

Production capacity = 150 * 60 * 1,000 = 9,000,000 minutes

Minutes required by each assembly worker to assemble 1 unit = 5

Units that can be produced based on capacity = 1,800,000 units (9,000,000/5)

Schedule of Production, Sales, and Ending Inventory:

August September October November December

Beginning inventory 0 300,000 600,000 400,000 (600,000)

Units produced 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000

Demand 1,500,000 1,500,000 2,000,000 3,000,000 500,000

Ending inventory 300,000 600,000 400,000 (600,000) 700,000