The Allswell Manufacturing company estimates that it will have an inventory of 1,000 units at the beginning of January. It is mid-December and the current production is 8,000 units per month. Projected monthly demand (in thousands) for the coming year is as follows:
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Demand 7 8 9 12 13 15 10 10 12 13 12 11
a. Plot this data and analyze it.
b. Using level production, what amount production should be planned for each month?
c. If inventory costs $1.00/unit/month, what is the total cost of inventory?