Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand.Suppose that the beginning inventory is 300, the production requirement in units of product is 1,350, demand forecast is 1,500, what is the ending inventory and percent safety stock?
A)200 and 10%
B)150 and 10%
C)300 and 20%
D)450 and 30%
E)150 and 20%

Question

Quizplus · Accepted Answer

Using the cut-and-try method, we can calculate the ending inventory as follows:

Ending inventory = beginning inventory + production requirement - forecast demand
Ending inventory = 300 + 1,350 - 1,500
Ending inventory = 150

To calculate the safety stock as a percentage of forecast demand, we can use the formula:

Safety stock = (Ending inventory - Minimum inventory needed) / Forecast demand

Assuming that the minimum inventory needed is zero, we get:

Safety stock = (150 - 0) / 1,500
Safety stock = 0.1 or 10%

Therefore, the best choice is B: 150 and 10%

Using the Cut-And-Try Method for Aggregate Operations Planning, We Can