ABSTRACT
The production plan has to be prepared by January, so that the seed can be purchased and planted in time for the crop to be harvested and canned between June and August. The resulting stock has to last until the start of the next harvesting and canning season in the following June. The cost of holding one unit in stock for one year is reckoned as a certain percentage of the money thus tied up. This percentage reflects the physical cost of storage, the risk of obsolescence and the opportunity cost incurred as a result of the capital tied up in stock. Forecasts of yearly demand for up to two years ahead were made, using the technique of exponential smoothing with trend correction. A mathematical model was derived which enabled an optimum production plan to be calculated analytically for each can size.
