The Donald Fertilizer Company produces industrial chemical fertilizers. The projected manufacturing requirements( in thousands of gallons) for the next four quarters are 80, 50,80 and 130 respectively. Stockouts and backorders are to be avoided. A level-inventory production strategy is desired.
a) Determine the quarterly production rate required to meet total demand for the year, without resorting to backorders or stockouts. Use the level-inventory strategy that minimizes the anticipation inventory that would be left over at the end of the year. Beginning inventory is zero.
b)Specify the anticipation inventories that will be produced?
c) Suppose that the requirements for the next four quarters are revised to 80,130,50 and 80 respectively.If the total demand is the same, what level or production rate is needed now, using the same strategy as part a)
Solution contains calculations of the quarterly production rate required to meet total demand for the year, without resorting to backorder or stock outs.