what is the basic idea behind this formula?

Question

how is :
Production=sales+closing stock-opening stock

Answer 1

Taking it in parts:

Closing stock-opening stock

This is the change in inventory. This could be more than zero, less than zero, or zero:

If the inventory is the same at the beginning and end of the period (zero change), then you've manufactured exactly enough units to keep up with sales. So sales=production. ex:
10 units sold
5 beginning inventory
5 ending inventory
10+(5-5)=10 units produced

If the inventory has reduced, then you've sold more product than you've manufactured. Some of the sales came from manufacturing. So sales-reduction in inventory=production ex:
10 sold
5 beginning inventory
3 ending inventory
10+(3-5)=10-2=8 units produced (two taken from inventory)

If the inventory is increased, you've manufactured more than you've sold. So sales+increase in inventory=production. ex:

10 sold
5 starting inventory
7 ending inventory

10+(7-5)=10+2=12 produced (two added to inventory)

Answer 2

take an example of pens
suppose u manufacture pens....
your sales for 14th feb = 300 pens
at the end of the day you are left with 200 pens
and when you opened the factory on 14 th you were already having 100 pens

so your production for 14th feb is
prod = 300+200-100 = 400
i.e you maufactured 400 pens on 14th feb
Happy Valentines Day......
Good Production

Answer 3

Looks like an Inventory tracking formula.

Answer 4

yes ok