Unformatted text preview: ve 100 already sitting in the warehouse left over from last year. We would produce 1100. If our worst case comes true, we end the year with 300 thousand units of inventory. If our best case comes true, we end the year with 0 inventory but every customer is served. In the worst case, we would have to buy 300 thousand units of inventory. At $20 per unit, that would tie up $6 million of our cash. We can see how much cash we would have left by bringing up the “Proforma Balance Sheet.” So long as we have $1 left in cash in our worst case, we can say, “We planned for the worst, but we hope for the best.” How do we make the decisions? Bring up the Production spreadsheet. Your Unit Sales Forecast (ideally our worst case) was brought over from the Marketing worksheet, and our Inventory on Hand (left over from last year) is shown below it. We have our best case forecast in hand. Schedule enough production to meet our best case forecast. Are there tips to keep in mind? Consider the question, “How many months of inventory are we willing...
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This note was uploaded on 01/19/2014 for the course BA 101 taught by Professor Daseau during the Fall '06 term at Oregon.
- Fall '06
- Business, Foundation Report