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5 March, 16:05

ABC Company plans to sell 6,700 units of its product in May. The company has 1,200 units in its May 1 finished-goods inventory and anticipates having 1,500 completed units in inventory on May 31. Based on the above information, how many units will the company produce in May

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  1. 5 March, 18:29
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    Total units to be produced 7,000

    Explanation:

    To solve this problem we use the inventory identity

    beginning + production = ending + sales

    production = ending + sales - beginning

    Sales for the period 6,700

    Desired Ending Inventory 1,500

    Total units requirement for May 8,200

    Beginning Inventory (1,200)

    Total units to be produced 7,000

    Also, with common sense we can understand that sales and ending inventory is all we need to cover.

    The beginning inventory are units already made to reach our goal, so it decrease our productions needs.
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