A company wants to develop a level production. The beginning inventory is 4. Demand for the next four periods is given in what follows.

1) What production rate per period will give a zero inventory at the end of period 1?

2) When and in what quantities will backorders occur?

3) What level production rate per period will avoid backorders? Then what will be the ending inventory in period 4?

4) If the cost of carrying inventory is $5 per unit per period and stockout cost $ 50 per unit, what will be the total cost of the plan developed in 4.1)?

5) What will be the cost of the plan developed in 4.3)?

6) Which is the better production plan between 4.1) and 4.3)? Explain why.

Period (Month)		1	2	3	4	Total
Forecast		12	6	8	14
Production (Level)
Ending inventory	4