Question

If, for a given product, average annual demand is 1,200 units and the average lead time is 4 months, then average lead time demand will be ___.

a) 300 units
b) 400 units
c) 4,800 units
d) none of the above

Answer 1

If, for a given product, average annual demand is 1,200 units and the average lead time is 4 months, then average lead time demand will be 400 units.

The average lead time demand for a product with an annual demand of 1,200 units and a lead time of 4 months is 400 units. Thus (option b) is right answer.

Step-by-step explanation:

If the average annual demand for a product is 1,200 units and the average lead time is 4 months, then the average lead time demand is calculated by dividing the annual demand by the number of months in a year and then multiplying by the lead time in months.

In this case, that would be (1,200 units / 12 months) × 4 months, which equals 400 units.

Therefore, the average lead time demand for this product is 400 units. Thus (option b) is right answer.