Which of the following lot sizing rules is best applied when setup or order costs are high
A) The fixed-order quantity rule
B) The lot-for-lot rule
C) The periodic-order quantity rule
D) The gross requirements rule

Question

Quizplus · Accepted Answer

The fixed-order quantity rule is best applied when setup or order costs are high as it aims to minimize setup costs by ordering a fixed quantity that will last a certain time period. This can help to reduce the number of setups required, thereby reducing setup costs. Lot-for-lot rule would not be the best choice as it generates numerous setups and may not be cost-effective. The periodic-order quantity rule is better suited for situations where demand is relatively constant or stable, whereas gross requirements rule is used for forecasting demand.

Which of the Following Lot Sizing Rules Is Best Applied