Accounting Assignment final (1)

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Seneca College *

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Economics

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Apr 3, 2024

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ASSIGNMENT 1 1. A production line is to run at 1000 units per month. Sales are forecast as shown in the following. Calculate the expected period-end inventory. The opening inventory is 600 units. All periods have the same number of working days. Answer Period 1 2 3 4 5 6 Forecast 750 800 1050 1600 1000 850 Planned Production 1000 1000 1000 1000 1000 1000 Planned Inventory - 600 850 900 550 0 600 750 2. A company wants to develop a level production plan. The beginning inventory is zero. Demand for the next four periods is given in what follows. What production rate per period will give a zero inventory at the end of period 4? When and in what quantities will backorders occur? What level production rate per period will avoid backorders? What will be the ending inventory in period 4?
Answer What production rate per period will give a zero inventory at the end of period 4? To achieve a zero inventory at the end of period 4, the production rate per period must be equal to the average demand over the four periods. This can be calculated as follows: Average demand = (Total demand in periods 1-4) / Number of periods = (9 + 5 + 9 + 9) / 4 = 7.75 units per period Therefore, a production rate of 7.75 units per period would result in a zero inventory at the end of period 4. When and in what quantities will backorders occur? Since the planned production is constant at 7.75 units per period, there will be backorders whenever demand exceeds production. In this case, backorders will occur in periods 2 and 3, as shown below: Period 1 2 3 4 Demand 9 5 9 9
Production 7.75 7.75 7.75 7.75 Backorders 1.25 1.25 1.25 1.25 The quantity of backorders in each period = difference between demand and production. What level production rate per period will avoid backorders? To avoid backorders, the production rate per period must be greater than or equal to the maximum demand in any period. In this case, the maximum demand is 9 units, so the production rate must be at least 9 units per period. What will be the ending inventory in period 4? Period 1 2 3 4 Demand 9 5 9 9 Production 9 9 9 9 Ending Inventory 0 4 4 4 Therefore, the ending inventory in period 4 would be 4 units. 3. A company wants to develop a level production plan for a family of products. The opening inventory is 100 units, and an increase to 130 units is expected by the end of the plan. The demand for each month is given in what follows. Calculate the total production, daily production, and production and ending inventory for each month
Answer Month May Jun Jul Aug Total Working Days 21 19 20 10 70 Forecast Demand 115 125 140 150 530 Planned Production 100 100 100 100 400 Planned Inventory - 100 185 160 120 70 535 Daily Production 4.76 5.26 5.00 10.00 5.71 4. Because of its labor contract, a company must hire enough labor for 100 units of production per week on one shift or 200 units per week on two shifts. It cannot hire, lay off, or assign overtime. During the fourth week, workers will be available from another department to work part or all of an extra shift (up to 100 units). There is a planned shutdown for maintenance in the second week, which will cut production to half. Develop a production plan. The opening inventory is 200 units, and the desired ending inventory is 300 units.
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