Determine the number of units that must produce
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Skanda Corporation has recently experienced a number of out-of-stock situations because of inadequate inventory levels. Finished goods inventory at the end of Feb, for example, was only 50 units an all-time low.
Management desires to implement a policy whereby finished-goods inventory is 20% of the following month's budgeted sales. Budgeted sales for March, April, and May are expected to be 5,000 units, 5,600 units, and 5,500 units, respectively.
Required:
Determine the number of units that Skanda must produce in March and the number of units that Skanda must produce in April in order to maintain their desired inventory levels at the end of each of those two months.
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The expert determines the number of units that must produced.
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