Assume you have been assigned the task of identifying a leve

Assume you have been assigned the task of identifying a level strategy aggregate production plan for the upcoming year. You have been informed that beginning inventory is 2,000 units, your plan should provide an ending inventory for the year equal to 500 units, and you have been provided the following forecasts of aggregate demand. What should be the planned rate of quarterly production?

Solution

Begining inventory =2000 units

Ending inventory=500 units

Qtr                                     Forecast

1                                        6000

2                                        5500

3                                        5000

4                                       6500

Planned rate of Quarterly production is

=[(6000+5500+5000+6500+)+500-2000]/4

=[(23000)+500-2000]/4

=[23500-2000]/4

=[21500]/4

=5375