Hamilton Corp. manufactures a component used in a popular gaming console. Demand has been strong and the executive staff at Hamilton is planning for next year. On October 1, they call you into a budgeting meeting where production plans are being reviewed. You learn that the inventory policy at Hamilton is to hold two-month’s worth of sales (to avoid issues with transportation disruptions). The sales budget for next year is 900,000 units, spread evenly over the year. Expected inventory at the end of this year is 75,000 units. The capacity of the plant is 950,000 units annually.

a. What production level next year will be required to meet the targets?
b. Are there any issues that you believe you should bring to the attention of the executive staff?
c. Do you have any suggestions for the resolution of these issues?

  • CreatedDecember 18, 2013
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