Husker Farm Supply has been selling their products for $4.00 each. During the last period, they sold a total of 312,500 products for Net Sales of $1,250,000. At the end of the period they have inventory of 37,750 units. (SHOW YOUR STEPS/WORK for each calculation)
a. If Husker Farm Supply expects the sales in the following period to remain constant, what should be the firm’s order for period 2 if the crude method of inventory management is used (Calculate & Interpret)?
b. If Husker Farm Supply expects the sales in the following period to remain constant, what should be the firm’s order for period 2 if the buffer method of inventory management is used (Calculate & Interpret)?
c. Assume in period 2, the firm sells 312,500 units and at the end of period 2, they stocked out by 4000 units. If the firm expects to sell the same quantity that could have been sold in period 1, what should be the firm’s order for period 2 using the buffer method of inventory management (Calculate & Interpret)?
d. Would the firm ever need to make adjustments to the assumption in which they expect to sell the same quantity they sold or could have sold in the previous period? Please explain.