Comfortwear Hosiery, Inc., produces men's socks at its manufacturing facility in Topeka, Kansas. The socks are stored in a warehouse near the factory prior to distribution to distribution center (DC) locations in Los Angeles, Memphis, and Dayton. The warehouse uses a top-down forecasting approach when determining the expected quantities demanded at each DC.
The aggregate monthly forecast for June is 12,000 pairs of socks. Historically, the Los Angeles DC has demanded 25 percent of the warehouse's stock. Memphis and Dayton have demanded 30 percent and 35 percent, respectively. The remaining 10 percent is shipped directly from the warehouse.
a. Based on the aggregate forecast, how many pairs of socks should you expect each DC to demand in June?
b. Suppose the aggregate forecast for July results in a 6 percent increase over June's forecast. How many pairs of socks would each DC anticipate in July?