the production of 2 kg cakes was raised by 50% in the months of March, April, November, and December. That means that the production was raised to 300 cakes per month instead of 200 for the 2 kg cakes to meet the expected demand. .The demand for 2 kg of cakes has been more than the production capacity for 2006. However, this demand had been fulfilled by the ending stick of 100 cakes each of both 1 Kg and 2 kg cakes of 2005. Still, at the end of 2006, 20 cakes have been left unsold of 2 kg each.
The demand for 1 kg of cakes has been lower than the production and the ending stock of 2006 was two hundred 1 kg cakes. As there had been leftover stock in 2005 as well of one hundred cakes of 1 Kg as well- this added to the already overproduced quantities of 1 Kg cakes.
However, the total surplus of the year 2006 only and not adjusting the ending stock of 2005, has been only 2 cakes in total. But an accumulated two hundred and twenty cakes have been added in the surplus of 2006 sales- showing a large overproduction of cakes and comparatively lower demand as production had increased.
The demand for 1 Kg cakes has fluctuated tremendously especially around the holiday season with sales going up to 1600 cakes in December. However, the sales of 2 Kg cakes have been relatively that varying and have been kept quite constant. One of the main reasons for this is that the 1 kg cake is targeted to be sold directly to the consumer and is sold over the shelf, making it possible to be purchased as gifts on holidays. However, the 2 kg cake is targeted to be sold in pieces in cafes, etc. and the sales have fluctuated but not as dynamically as the 1 Kg cake for the stated reason.
Even with an ending stock of two hundred and twenty cakes, the current production levels will not be able to meet the high demand for the 2007 forecast- projecting a 1900 shortage from 2007 production only. .