For the production lot size,Q,the average inventory is one-half the maximum inventory,or 1/2Q.

Name: For the production lot size,Q,the average inventory is one-half the maximum inventory,or 1/2Q.
Brand: Quizplus
Rating: 4.8 (35 reviews)

Question

Quizplus · Accepted Answer

This statement is true. The average inventory for any production lot size Q can be calculated using the formula:
Average Inventory = (Maximum Inventory + Minimum Inventory) / 2
Since the minimum inventory is zero, the formula can be simplified to:
Average Inventory = Maximum Inventory / 2 = 1/2Q.

For the Production Lot Size,Q,the Average Inventory Is One-Half the Maximum