Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand. Suppose that the beginning inventory is 300, the production requirement in units of product is 1,350, and demand forecast is 1,500. What is the ending inventory and percent safety stock?
A) 200 and 10%
B) 150 and 10%
C) 300 and 20%
D) 450 and 30%
E) 150 and 20%

Question

Quizplus · Accepted Answer

Using the cut-and-try method, we start with the production requirement and add the beginning inventory:

1,350 + 300 = 1,650 (This is the total available supply)

We subtract the forecast demand to get the ending inventory:

1,650 - 1,500 = 150

To calculate the safety stock as a percentage of forecast demand, we use the ending inventory and the forecast demand:

Safety Stock = (Ending Inventory / Forecast Demand) x 100%

Safety Stock = (150 / 1,500) x 100%

Safety Stock = 10%

Therefore, the ending inventory is 150 and the percent safety stock is 10%. The best choice is B.

Using the Cut-And-Try Method for Aggregate Operations Planning, We Can