Question

A popular elective vehicle manufacturer produces and sells 240,000 vehicles per year. After placing orders, its customers wait for an average of 3 months to receive their vehicles. What is the average sales backlog for the company (i.e., the average number of outstanding orders)?

Answer 1

The average sales backlog for the company, which sells 240,000 vehicles per year and has a 3-month waiting period for deliveries, is 60,000 vehicles.

Step-by-step explanation:

To calculate the average sales backlog for the company, we need to find the average number of outstanding orders waiting to be fulfilled at any given time. Since the company sells 240,000 vehicles per year, we can break this down into a monthly figure by dividing by 12, giving us 20,000 vehicles sold per month. As customers wait for an average of 3 months, the backlog would involve the total number of vehicles sold over those three months. Therefore, the average sales backlog can be calculated as 20,000 vehicles/month times 3 months, giving us an average backlog of 60,000 vehicles.