A Very Confused Manager Is Reading a Two-Page Report Given

question 31

Essay

A very confused manager is reading a two-page report given to him by his student intern."She told me that she had my problem solved,gave me this,and then said she was off to her production management course," he whined."I gave her my best estimates of my on-hand inventories and requirements to produce,but what if my numbers are slightly off? I recognize the names of our four models W,X,Y,and Z,but that's about it.Can you figure out what I'm supposed to do and why?" You take the report from his hands and note that it is the answer report and the sensitivity report from Excel's solver routine.
Explain each of the highlighted cells in layman's terms and tell the manager what they mean in relation to his problem.

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Definitions:

Specific Identification

A method of inventory costing that identifies and assigns the actual cost to each individual item of inventory.

High-cost Items

Products or services that have a significant purchase price or maintenance cost.

Periodic Inventory System

An inventory system where inventory levels and the cost of goods sold are updated in the accounting records periodically, often at the end of an accounting period.

Gross Profit Method

An accounting technique used to estimate the amount of inventory a company has by using the gross margin percentage.