Question

Dart is a product of the digby company. digby's sales forecast for dart is 2079 units. digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (they would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) taking current inventory into account, what will dart's production after adjustment have to be in order to have a 10% reserve of units available for sale?

Answer 1

Production is the creation of goods and services for other services or money. In other words it is the output from raw materials or intermediate goods

For a company to produce any extra units above its normal production the following factors have to be considered and where necessary be adjusted appropriately.
1. Labour because increase in production requires increase in labour capital meaning increase man power or machines involved
2. Increase input- the raw materials required for production must be increased
3. cost of production for the total units has to be increased to get extra units

for Digby company above production=2079 units

let this be 100%
Making a surplus of 10% means the total production will be 110%

if 100%=2079
∴ 110%=      
[ 2079÷100}×110%

           =2286.9 units
           ≈2287 units