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A Hardware Company Is Interested in Developing a Net Requirement

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Essay

A hardware company is interested in developing a net requirement schedule for one of its products, a claw hammer. The beginning inventory for the product is 1500 units, and the safety stock is 300 units. The weekly demand over a six-week planning horizon is 400, 850, 560, 900, 600, and 700 units.
a.What would the net requirements be for Week 2?
b.What is the ending inventory in Week 4?


Definitions:

Long Calls

An option strategy involving the purchase of call options, giving the buyer the right, but not the obligation, to purchase a security at a specified price within a certain time frame.

Delta

In finance, a measure of the sensitivity of an option's price to a change in the price of the underlying asset, indicating how much the price of the option is expected to move based on a $1 change in the underlying asset.

Underlying Asset

The financial asset upon which a derivative's price is based, such as stocks, bonds, commodities, or currencies.

Hedge Ratio

The proportion of a position which is hedged, representing a strategy to minimize the risk of adverse price movements in an asset.

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