Asked by Elizabeth Candelmo on Jun 21, 2024
Verified
The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set up cost is small compared to holding cost.
Lot-For-Lot
A lot-sizing technique that generates exactly what is required to meet the plan.
Set Up Cost
Expenses associated with preparing equipment or facilities for a task, such as a production run or a new process.
Holding Cost
The expenses associated with storing inventory, including warehousing, insurance, depreciation, and opportunity costs.
- Understand the lot-sizing techniques and the conditions under which they are applied.
Verified Answer
KS
karan singhJun 27, 2024
Final Answer :
True
Explanation :
The lot-for-lot lot-sizing technique is recommended when demand is not very stable and the setup cost is small in comparison to holding cost. This method implies that the order quantity will always be equal to the net requirements, which will prevent excessive orders and wastage. It's beneficial for businesses with fluctuating demand since it allows them to satisfy demand while avoiding inventory excess.
Learning Objectives
- Understand the lot-sizing techniques and the conditions under which they are applied.
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