1999 Volume 7 Issue 1-2 Pages 115-135
Budgeting is comprehensive period planning, which integrates various planning such as; production, sales, finance, personnel, research and development. In enter-prise, sales quantity, sales price, and the purchase price of materials are estimated on monthly or quarterly basis. When a multi-period product-mix decision is handled, all sales quantities and production quantities in a period of time must be simultaneously decided and an inventory must be taken into consideration. However papers about product-mix, rarely deal with these problems.
Thus the purpose of this paper is to construct a model for proposing how to decide the optimal product-mix, which includes simultaneous budgeting of prodution quantities, sales quantities, ending inventory quantities, in all periods of time together with the fluctuation of purchase price, sales price, and production materials.
This paper deals with ending inventories under the assumption that these quantities are not equal to inventory quantities calculated at the beginning of a period. Costs of completed goods are determined by the FIFO method in this paper, so any lots which vary in production time are included in the same sales quantities. This condition cannot be grasped unless both sales and production quantities for all periods of time are determined.
Thus in this model all possible patterns are considered, and this is called “scenario” Each “scenario” searches for the biggest value and the biggest one among all of them is then used as the final goal in this model. As a result of using this model, production, sales and ending inventory quantities in all periods of time can be decided. In turn production, sales and ending inventory quantities will affect account receivable, payable and inventory assets and other accounts. If a matrix accounting system is introduced into the above model, balance sheets and income statements can be estimated.
