The following table presents generic motors company's production budget. gm's inventory policy is to have ending inventory equal to20% of next month's sales.

february march april
ending inventory 5,000
beginning inventory 2,000
budgeted sales 13,000 17,000 18,000
budgeted production

required:
(a) fill in the missing numbers in the table above.
(hint if you get stuck: what is the relation between ending inventory for one month and beginning inventory for the following month? )

b) why do firms want to hold inventory of finished goods? (an alternative could be to produce exactly the amount they are going to sell, and hold zero inventories)