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The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70 percent of the next month's sales. It is currently estimated that there will be 4,200 units on hand at the end of August. Calculate the number of units to be produced in each of the months of September, October, and November.

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TomShelby

Answer:

[tex]\left[\begin{array}{ccccc}& &September&October&November\\&$sales&6000&6800&5600\\&$Desired ending&4760&3920&4270\\&$Total Needs&10760&10720&9870\\&$beginning&4200&4760&3920\\&$Production Requirement&6560&5960&5950\\\end{array}\right][/tex]

MISSING INFORMATION ATTACHED

Explanation:

[tex]\left[\begin{array}{ccccc}& &September&October&November\\&$sales&6000&6800&5600\\&$Desired ending&4760&3920&4270\\&$Total Needs&10760&10720&9870\\&$beginning&4200&4760&3920\\&$Production Requirement&6560&5960&5950\\\end{array}\right][/tex]

The sales forecasted plus the desired ending inventory is the complete needs the sales department expect to be fullfill

Then, as the company has a beginning invneotry each period a portion of this needs is already fullfil thus, the difference are the production requirements.

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