Bioclean Co., a merchandiser, sells a biodegradable cleaning product and has predicted the following sales for the first four months of the current year: Jan. Feb. March April Sales in Units 1,800 2,000 2,200 1,700 Ending inventory for each month should be 30% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?

Question

Business

Shawn

5 March, 13:25

Bioclean Co., a merchandiser, sells a biodegradable cleaning product and has predicted the following sales for the first four months of the current year: Jan. Feb. March April Sales in Units 1,800 2,000 2,200 1,700 Ending inventory for each month should be 30% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?

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Amelie Luna · Answer 1

2,060 units

Explanation:

As we know thestock policy of the firm is the ending inventory for each month should be the 30 % of the next month's sales

In the case of february, following this policy:

Starting inventory: is the same of ending inventory of the previous month: 0,3*2,000 (February's sales) units = 600 units. Ending inventory = 0,3*2,200 (March's sales) units = 660 units

Also, Ending Inventory (EI) is the result of the sum of Starting Inventory (SI) and February Purchases (P) minus February Sales (S)

EI = SI+P-S

We want to know P (units Purchased), so:

P = EI-SI+S = 660-600+2,000=2060 units