Table D.5
The Harper Company is in the process of production planning for the next four quarters.The company follows a policy of a stable workforce and uses overtime and subcontracting to meet uneven forecasted demand.Anticipation inventory is also allowed,but not backorders.Undertime is paid,at a rate of $5.00 per unit.The beginning (or current)inventory is 25 units.Details are shown in the following POM for Windows table.
-Use the information in Table D.5.What is the anticipation inventory at the end of the first quarter?
A)0 units
B)1 through 5 units
C)6 through 10 units
D)11 units and above

Question

Table D.5
The Harper Company is in the process of production planning for the next four quarters.The company follows a policy of a stable workforce and uses overtime and subcontracting to meet uneven forecasted demand.Anticipation inventory is also allowed,but not backorders.Undertime is paid,at a rate of $5.00 per unit.The beginning (or current)inventory is 25 units.Details are shown in the following POM for Windows table.  
-Use the information in Table D.5.What is the anticipation inventory at the end of the first quarter?
A)0 units 
B)1 through 5 units 
C)6 through 10 units 
D)11 units and above

Quizplus · Accepted Answer

To find the anticipation inventory at the end of the first quarter, we need to first calculate the production quantity for each quarter using the following formula:
Production quantity = Forecasted demand + Anticipation inventory - Beginning inventory
For the first quarter, the forecasted demand is 100 units, the anticipation inventory is 25 units (as given in the question), and the beginning inventory is 25 units. Therefore, the production quantity for the first quarter is:
Production quantity = 100 + 25 - 25 = 100 units
Since the production quantity is equal to the forecasted demand, there will be no anticipation inventory at the end of the first quarter. Hence, the answer is option B, 1 through 5 units.

Table D.5 The Harper Company Is in the Process of Production Planning