Question

The Donald Fertilizer Company produces industrial chemical fertilizers. The projected manufacturing requirements (in thousands of gallons) for the next four quarters are 80, 50, 80, and 130, respectively. A level workforce is desired, relying only on anticipation inventory as a supply option. Stockouts and backorders are to be avoided, as are overtime and undertime.

a. Determine the quarterly production rate required to meet total demand for the year, and minimize the anticipation inventory that would be left over at the end of the year. Beginning inventory is zero.

b. Specify the anticipation inventory that will be produced.

c. Suppose that the requirements for the next four quarters are revised to 80, 130, 50, and 80, respectively. If total demand is the same, what level of production rate is needed now, using the same strategy as part (a)?

Please use excel and show formulas ( Formula auditing mode) please

Answer 1

a. quarterly production rate = average(80,50,80,130) = 85
b. Anticipation inventory that would be produced at the end of the ear = 0

Formula

c.

Level of production rate needed now = 130 as we are avoiding stockouts, backorders, overtime and undertime.and following a level production plan. This will increase the ncipated inventory though

Formula