Question: Consider the following information Each unit sells for 500

Consider the following information:

Each unit sells for $500. Regular production and overtime production costs are $350 and $450 per unit, respectively.
The cost to hold a unit in inventory for one month is $10.
a. Develop a cash flow analysis for this problem. Be sure to calculate net cash flow and cumulative net cash flow for each month.
b. Why do the net cash flows for April and May look so much better than those for the other months? What are the implications for building up and draining down inventories under a level production plan?

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  • CreatedApril 10, 2015
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