Dug is a product of the Digby company. Digby's sales forecast for Dug is 2069 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Dug's Production After Adjustment have to be in order to have a 10% reserve of units available for sale

Question

Business

Stella Hutchinson

30 November, 23:29

Dug is a product of the Digby company. Digby's sales forecast for Dug is 2069 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Dug's Production After Adjustment have to be in order to have a 10% reserve of units available for sale

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Answers (1)

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Tommy Farrell · Answer 1

The correct answer is 2,276 units.

Explanation:

According to the scenario, computation of the given data are as follows:

Sales = 2,069 units

Reserve percentage = 10%

So, we can calculate the units of production by using following formula:

Units of production = Sales * (1 + Reserve %)

By putting the value, we get

Units of production = 2,069 * (1 + 10%)

= 2,069 * 1.10

= 2,275.9 or 2,276 units