Answer:
D
Explanation:
To allocate the excess , a ratio formula shall be used to allow fairness and accuracy .
Workings
Customer 1 demand - 115,000
Customer 2 demand- 110,000
Customer 3 demand - 95,000
Customer 4 demand- 170,000
Customer 5 demand- 10,000
Total 500,000
Excess production = (515000 -500000) = 15,000
Share allocated to customer 1 = Customer 1 demand / total demand * Excess production
115,000/500000*15000= 3,450
The number of Excess product that should be sent to Customer 1 is 3,450 product.
Here, we are to calculate the number of Excess product that should be sent to Customer 1.
Now, to be able to allocate the excess to Customer 1, we will use a ratio formula allow fairness and accuracy .
Details
Customer 1 Demand - 115,000
Customer 2 Demand - 110,000
Customer 3 Demand - 95,000
Customer 4 Demand- 170,000
Customer 5 Demand - 10,000
Total 500,000
The excess production = 515,000 - 500,000
The excess production = 15,000
Calculation of shares to be allocated to Customer 1
Share allocated to customer 1 = (Customer 1 demand / Total demand) * Excess production
Share allocated to customer 1 = (115,000/500,000) * 15,000
Share allocated to customer 1 = 0.23 * 15,000
Share allocated to customer 1 = 3,450
Therefore, the number of Excess product that should be sent to Customer 1 is 3,450 product.
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