Estimate your total end-of-season-end costs using Exhibit 2. Note: To do this you will have to develop a forecast of demand for 18” and 36” tiles

        The season end costs are evaluated by keeping the number produced over the period. The Exhibit 2 discuss various costs related to production and inventory. As the amount of sales increases the number produced by the business also increases as a result.  The inventory carrying cost increase due to increase in the amount of produced tiles. It can be seen that when the production increases the related costs also increases. For producing more goods the overtime has been done which means that the overtime cost will be incurred. Over the period stocks out does not occur because the tiles available for sale are more than then the actual sales. It means that sales remain lower than the production volume (PANNEERSELVAM 2012).

Reference of Lamson Corporation (R)

PANNEERSELVAM, R. 2012. PRODUCTION AND OPERATIONS MANAGEMENT. PHI Learning Pvt. Ltd.