(a) For each of the following, state three reasons why a firm may wish to keep:
(i) A minimum inventory level of finished goods, and
(ii) An even level of production in the face of fluctuating demand.
(b) The sales forecast for Douglas & Co for July–December 2017 is:

Produce a production budget showing monthly opening and closing inventory figures if the firm wishes to maintain an even level of producing 300 units each month, and a minimum inventory level of 150 units.
What must the opening inventory be at 1 July to achieve this?
(c) Under what circumstances, in budgetary control, may a firm’s productive capacity prove to be its limiting or key factor?

Transcribed Image Text:

Units J 280 A 200 S 260 360 N 400 D 420