A company currently has 500 items in inventory. The demand for the next 2 months is 900 and 1200 units. Assuming a level production rate of 1000 units per month, determine the ending inventory at the end of the second month.
A) 300
B) 400
C) 500
D) 600

Question

Quizplus · Accepted Answer

The company starts with 500 items and produces 1000 units per month for 2 months, totaling 2000 units produced. The total demand over 2 months is 900 + 1200 = 2100 units. Starting inventory plus production is 500 + 2000 = 2500 units. Subtracting the demand (2100 units) from this gives an ending inventory of 400 units.

A Company Currently Has 500 Items in Inventory