Company expects to sell 500 units during the second quarter and 550 units in the third quarter. Currently, during the second quarter, they have 46 units on hand. If they desire safety stock of 10% of the next quarter's sales, units will need to be produced in the second quarter.

509 units

Explanation:

The expected sales in the present quarter is 500 units (for second quarter) and we have 46 units on hand.

We want a reserve of 10% during the next quarter.

The expected sales in next quarter is 550 units so reserve of 10% is

Reserve = 0.10 * 550= 55 units

Balance to produce this quarter= 500 - 46= 454 units

Total to produce= Balance produced + Reserve

Total to produce= 454 + 55= 509 units

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