Using the cut-and-try method for aggregate operations planning, we can determine the production requirement in units of product. If the beginning inventory is 100 units, the demand forecast is 1,200, and the necessary safety stock is 20 percent of the demand forecast, which of the following is the production requirement?
A) 1,200
B) 1,300
C) 1,340
D) 1,500
E) 1,540

Question

Quizplus · Accepted Answer

First, we need to calculate the safety stock:
Safety Stock = Demand Forecast x Necessary Safety Stock
Safety Stock = 1,200 x 0.2
Safety Stock = 240
Next, we calculate the total requirements:
Total Requirements = Demand Forecast + Safety Stock - Beginning Inventory
Total Requirements = 1,200 + 240 - 100
Total Requirements = 1,340
Therefore, the production requirement is 1,340 units.

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