2 [5 points]. For the last three years, our company has maintained the following buffer inventory policy: at the end of each month, finished goods inventory in units must equal 30% of the next month's unit sales. To reduce the amount of cash tied up in inventory, we decided to reduce the inventory buffer to 20% of the next month's unit sales, starting in February 2018. At the beginning of 2018, we estimated unit sales for the first four months of 2018: Estimated unit sales January February March April 22,000 30,800 28,600 35,200 Based on these estimates and the inventory buffer policies, the number of units budgeted to be made in the first quarter of 2018 is closest to: A. 84,040 B. 80,520 C. 88,440 D. 81,840 E. 88,880 Answer: D. Beginning January inventory = 22,000 30% (old policy) = 6,600 units. Ending March inventory = 35,200 20% (new policy) = 7,040 units. Total units budgeted for sale in Q1 = 22,000 + 30,800+ 28,600 = 81,400 units. So number of units budgeted for production = 81,400 +7,040 - 6,600 = 81,840.