Part a$.)$

MONTH SALES FORECAST REGULAR PRODUCTION OVERTIME PRODUCTION ENDING INVENTORY CASH INFLOWS CASH OUTFLOWS NET FLOW CUMULATIVE NET FLOW

$0$

January $80011500350$

February $100011500500$

March $120011500450$

April $140011500200$

May $160011501500$

June $150011503500$

Information:

Cash inflow per cabinet: $$500$

Regular production outflow: $$350$

Overtime production outflow: $$450$

Monthly inventory holding cost: $$10$

QUESTIONS:

$1.$ Use the information to develop a cash flow analysis in the table above

$2.$ Why do the net cash flows for April and May look so much better than those for the other months? What are the consequences for building up and draining down inventories under a level production plan?