A Firm Produces One Product on a Produce-To-Stock Basis and Is

question 40

Essay

A firm produces one product on a produce-to-stock basis and is trying to develop a master production schedule for production. The safety stock level for this product is 30 units and the fixed lot size is 50 units. The beginning inventory is given as 50 units. The demand for this product comes from four different sources and the demand estimates for the next four weeks are given as:
$\begin{array}{|l|l|l|l|l|}\hline &\text { Week }\\\hline \text { Source } & 1 & 2 & 3 & 4 \\\hline \text { Intra-company orders } & 10 & 0 & 0 & 20 \\\hline \text { Warehouse Orders } & 0 & 20 & 0 & 10 \\\hline \text { R \& D Orders } & 10 & 0 & 10 & 0 \\\hline \text { Customer Orders } & 30 & 25 & 15 & 30 \\\hline \text { Total Weekly Demand } & 50 & 45 & 25 & 60\\\hline\end{array}$
a. What is the production quantity for week 2?
b. What is the beginning inventory for week 4?

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Definitions:

RRSP

Registered Retirement Savings Plan, a tax-deferred account aimed at helping Canadians save for retirement.

Annual Contributions

Payments or deposits made into a financial account or investment plan once every year.

Compounded Monthly

A process where the interest earned on an investment is recalculated every month, incorporating both the initial principal and the accumulated interest.

Annuity

An income-generating financial offering that provides fixed periodic payments, largely intended for the retired population.