Question

Schrank company is trying to decide how many units of merchandise to order each month. company policy is to have 20% of the next month's sales in inventory at the end of each month. projected sales for august, september, and october are 30,000 units, 20,000 units, and 40,000 units, respectively. how many units must be purchased in september?

Answer 1

Assuming  the company decide how many units of merchandise to order each month. The number of units that mus be purchased in september is 24,000 units.

Number of units

Using this fomula

Number of units=September sales units-Beginning inventory +Desired ending inventory

Hence:

September sales units 20,000

Beginning inventory  (4,000)

(20,000 x 0.20)

Desired ending inventory 8,000

(40,000×0.20)

Number of units 24,000

(20,000-4,000+8,000)

Inconclusion the number of units that mus be purchased in september is 24,000 units.

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