What are implications of building up then draining inventory

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Reference no: EM132258509

Month Forecasted Sales (units) Regular Production Overtime Production Ending Inventory January 800 1150 0 350 February 1000 1150 0 500 March 1200 1150 0 450 April 1400 1150 0 200 May 1600 1150 150 0 June 1500 1150 350 0 Each unit sells for $500. Regular production costs $350 per unit and overtime costs $450 per unit. Holding cost is $10 per unit per month. Part a: Develop a cash flow analysis for this problem. Be sure to calculate net cash flow and cumulative cash flow for each month. Part b: Why do the net cash flows look so much better for April and May? What are the implications of building up then draining inventory? (Can someone attach an excel step-by-step please)

Reference no: EM132258509

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