Problem - Trendsetters, Inc. has actual sales for July and August and forecasted sales for September, October, November, and December as follows:
Actual:
July 5,900 units
August 6,200 units
Forecast:
September 6,000 units
October 6,800 units
November 5,600 units
December 6,100 units
Required: Show computations
a. The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70 percent of the next month's sales. It is currently estimated that there will be 4,200 units on hand at the end of August. Calculate the number of units to be produced in each of the months of September, October, and November.
b. Each unit of finished product requires 6.5 pounds of raw materials. The firm's policy is to have raw material inventory on hand at the end of each month that is equal to 60 percent of the next month's estimated usage. It is currently estimated that 26,000 pounds of raw materials will be on hand at the end of August. Calculate the number of pounds of raw materials to be purchased in each of the months of September and October.