Consider the estimated aggregate demand for a company's ski product line for the upcoming year in the following table.Calculate the ending inventory level for January under a level production strategy.Assume the beginning inventory for January is 8,000 units. $$\begin{array} { | c | c | c | c | }
\hline \text { Month } & \begin{array} { c }
\text { Demand } \
\text { (in pairs } \
\text { of unit) }
\end{array} & \text { Month } & \begin{array} { c }
\text { Demand } \
\text { (in pairs } \
\text { of units) }
\end{array} \
\hline \text { J an } & 8,000 & \text { J uly } & 1,000 \
\hline \text { Feb } & 7,000 & \text { Aug } & 1,300 \
\hline \text { Mar } & 5,000 & \text { Sept } & 2,000 \
\hline \text { Apr } & 4,000 & \text { Oct } & 3,000 \
\hline \text { May } & 2,000 & \text { Nov } & 5,700 \
\hline \text { J une } & 2,000 & \text { Dec } & 7,000 \
\hline
\end{array}$$
A)3,000
B)5,000
C)4,000
D)5,500

Question

Consider the estimated aggregate demand for a company's ski product line for the upcoming year in the following table.Calculate the ending inventory level for January under a level production strategy.Assume the beginning inventory for January is 8,000 units. $$\begin{array} { | c | c | c | c | } 
\hline \text { Month } & \begin{array} { c } 
\text { Demand } \
\text { (in pairs } \
\text { of unit) }
\end{array} & \text { Month } & \begin{array} { c } 
\text { Demand } \
\text { (in pairs } \
\text { of units) }
\end{array} \
\hline \text { J an } & 8,000 & \text { J uly } & 1,000 \
\hline \text { Feb } & 7,000 & \text { Aug } & 1,300 \
\hline \text { Mar } & 5,000 & \text { Sept } & 2,000 \
\hline \text { Apr } & 4,000 & \text { Oct } & 3,000 \
\hline \text { May } & 2,000 & \text { Nov } & 5,700 \
\hline \text { J une } & 2,000 & \text { Dec } & 7,000 \
\hline
\end{array}$$
A)3,000
B)5,000
C)4,000
D)5,500

Quizplus · Accepted Answer

Under a level production strategy, the company will produce the same number of units each month irrespective of the demand. To calculate the ending inventory level for January, we need to first calculate the total number of units produced from January to December.

Total production = (8,000 + 7,000 + 5,000 + 4,000 + 2,000 + 2,000 + 1,000 + 1,300 + 2,000 + 3,000 + 5,700 + 7,000) = 48,000 pairs of units.

Now, we need to subtract the demand for the year from the total production to find the ending inventory for December.

Ending inventory for December = total production - demand for the year
= 48,000 - (8,000 + 7,000 + 5,000 + 4,000 + 2,000 + 2,000 + 1,000 + 1,300 + 2,000 + 3,000 + 5,700 + 7,000)
= 48,000 - 45,000
= 3,000 pairs of units.

Finally, we can calculate the ending inventory for January by subtracting the demand for January from the ending inventory for December and adding the beginning inventory for January.

Ending inventory for January = ending inventory for December - demand for January + beginning inventory for January
= 3,000 - 8,000 + 8,000
= 4,000 pairs of units.

Therefore, the best choice is C) 4,000.

Consider the Estimated Aggregate Demand for a Company's Ski Product