estimated volume of activity for a future period based on forecasts of sales of product or service, adjusted for planned changes in inventory levels. For example, assume on June 30 there are 10,000 finished units on hand. Sales for July are expected to be 50,000 units, and management wishes to have an inventory of 20,000 units on hand on July 31 in order to fill a growing demand. Then the expected production volume for July is 60,000 units (50,000 planned sales + 20,000 desired inventory 10,000 beginning inventory).