A book I am reading through lists the formula for months of supply in a word problem as
(total units)/(units removed)*12
For instance you have a stock of 2,000 PS3s and you removed 500 from your inventory for the year. What is your month of supply for PS3s? 2,000/500*12=48 months of supply. In other words Month of supply is the rate rate at which which you are selling PS3s, if you were to purchase no more to add to your stock, it would take 48 months to sell what you currently have at this current rate.
Problem: I dont understand why we are using division or multiplying by 12? Is total units/ units removed giving us per month, so we multiply by 12 to get it for a year?
For instance if you have the years unit cancels out from the numerator and denominator giving us an answer with no units??? If thats the case how are we able to multiply by 12?
Would some one please clarify, many thanks