Question & Answer: A firm's quarterly demand rate is 250. If the firm optimal order quantity is 400 units, how many orders…

A firm’s quarterly demand rate is 250. If the firm optimal order quantity is 400 units, how many orders does the firm make per year on average? 2.5 0.8

Expert Answer

Given in the question :-

Let Demand rate be D.

Quaterly demand rate (D)=250

Thus yearly Demand Rate(D)= 250*4=1000

Also Given is Optimal Order Quantity = 400

The formula for Expected Number orders= N = Demand Rate/Optimal Order Quantity

Thus On Average the order the firm makes per year = 1000/400=2.5.

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