Question

Drat is a product of the Digby company. Digby's sales forecast for Drat is 1861 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Drat's Production After Adjustment have to be in order to have a 10% reserve of units available for sale?

Answer 1

2,047 units

Step-by-step explanation:

The computation of total units of dude's production is shown below:-

Production units = Sales × (1 + Reserve Percentage)

= 1,861 × (100 + 10%)

= 1,861 × 110%

= 2,047 units

Note:- Here, we will not consider the current inventory as it is not given in the question.

Therefore for computing the total units of dude's production we simply applied the above formula.