A Company Wants to Develop a Level Production Plan for a Family

question 6

Essay

A company wants to develop a level production plan for a family of products. The opening inventory is 100 units, and an increase to 160 units is expected by the end of the plan. The demand for each period is given. How much should the company produce
each period? What will be the ending inventories in each period. Assume all periods have the same number of working days. $$\begin{array} { l l l l l l l l } \text { Period } & 1 & 2 & 3 & 4 & 5 & 6 & \text { Total } \\\text { Forecast Demand } & 100 & 120 & 130 & 140 & 120 & 110 & \\\text { Planned Production } & & & & & &\\\text { Planned Inventory }& 100\end{array}$$

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Definitions:

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used to isolate the effect of one variable in economic analysis.

Law Of Demand

An economic principle stating that as the price of a good increases, demand for that good decreases, and vice versa, all else being equal.

Prices Fall

A market condition where the cost of goods and services decreases over time.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable on another by holding all other relevant factors constant in an analytical context.