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If annual demand is 2,400 units and orders are placed in monthly intervals, the average amount of inventory is 100 units.

a) true
b) false

User ArlanG
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1 Answer

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Final answer:

Whether the average amount of inventory is 100 units depends on demand distribution, order quantity, and lead time. Assuming linear depletion with no stockouts or lead time, for a monthly order to meet an annual demand of 2,400 units, the statement is true.

Step-by-step explanation:

The statement that if annual demand is 2,400 units and orders are placed in monthly intervals, the average amount of inventory is 100 units, cannot be verified as true without additional information. The average inventory level depends on several factors, including the order quantity, the rate of demand, and the replenishment lead time.

If we assume that the demand is evenly distributed and there are no stockouts or lead time, then ordering monthly for an annual demand of 2,400 units would imply that each order is for 200 units (2400 units / 12 months). However, the average inventory would be half of the order quantity if inventory depletion is linear over the month, which is 100 units. Therefore, under these specific conditions, the statement would be true.

User Dropbeardan
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