Question

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Determine the level production rate if a level strategy is selected with the goal of ending Period 4 with 100 units of inventory.

Answer 1

Answer: 325 units

Step-by-step explanation:

The level production rate if a level strategy is selected with the goal of ending Period 4 with 100 units of inventory will be selected thus:

First, we calculate the total demand for the four months which will be:

= 200 + 400 + 250 + 350

= 1200 units

Therefore, to have an ending inventory of 100 units in period 4 will be:

= (1200 + 100)/4

= 1300/4

= 325 units

Therefore, 325 units will be produced every month.