CLASS EXERCISE

TOPIC: Materials Management

2.1. If the opening inventory is 400 units, demand is 900 units, and production is 700 units, what will be the ending inventory?

2.2. A company wants to produce 480 units over the next three months at a uniform rate. The months have 19, 20, and 21 working days, respectively. On the average, how much should the company produce each day to level production?

2.3. A company plans to produce 25,000 units in a 3-month period. The months have 22, 21, and 20 working days, respectively. What should the average daily production be?

2.4. In problem 2.2, how much will be produced in each of the three months?

Answer. Month 1: 158 Month 2: 166 Month 3: 174

2.5. In problem 2.3, how much will be produced in each of the three months?

2.6. 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.

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

2.7 A company wants to develop a level production plan for a family of products. The opening inventory is 100 units, and an increase to 150 units is expected by the end of the plan. The demand for each period is given in what follows. How much should the company produce each period? What will be the ending inventories in each period? All periods have the same number of working days.

Period	1	2	3	4	5	6
Forecast	100	120	125	130	115	110
Planned production
Planned Inventory	100

2.8. A company wants to develop a level production plan for a family of products. The open- ing inventory is 550 units, and a decrease to 200 units is expected by the end of the plan. The demand for each of the periods is given in what follows. All periods have the same number of working days. How much should the company produce each period? What will be the ending inventories in each period? Do you see any problems with the plan?

Period		1	2	3	4	5	6	Total
Forecast demand		1300	1200	800	600	800	900	5600
Planned production
Planned inventory	550

2.9. 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.

a. What production rate per period will give a zero inventory at the end of period 4?

b. When and in what quantities will backorders occur?

c. What level production rate per period will avoid backorders? What will be the ending inventory in period 4?

Period		1	2	3	4	Total
Forecast demand		9	5	9	9	32
Plannedproduction
Planned inventory	0

2.10. If the cost of carrying inventory is $60 per unit per period and stockout cost $500 per unit, what will be the cost of the plan developed in problem 2.9a? What will be the cost of the plan developed in 2.9c? Answer. Total cost for plan in question 2.9a = $650 Total cost for plan in question 2.9c = $600

2.11 The opening backlog is 800 units. Forecast demand is as shown here. Calculate the weekly production for level production if the backlog is to be reduced to 100 units.

Week		1	2	3	4	5	6	Total
Forecast demand		750	700	550	700	600	500	3800
Planned production
Planned backlog	800

2.12 For the following data, calculate the number of workers required for level production and the resulting month-end inventories. Each worker can produce 15 units per day, and the desired ending inventory is 9000 units.

Month		1	2	3	4	Total
Working days		20	24	12	19
Forecast demand		28000	27500	28500	28500
Planned production
Planned inventory	11250