What lot-sizing technique is generally preferred when inventory holding costs are extremely high?
A) lot-for-lot
B) EOQ
C) part-period balancing
D) the Wagner-Whitin algorithm
E) All of the above are appropriate for the situation.

Question

Quizplus · Accepted Answer

When inventory holding costs are extremely high, it is generally preferred to use lot-for-lot sizing technique. This is because it is a cost-efficient method that helps in minimizing the inventory holding costs by producing and delivering only the required amount of inventory to meet the immediate demand. Other techniques like EOQ or the Wagner-Whitin algorithm may lead to higher inventory holding costs and may not be as cost-effective in such situations. Part-period balancing is suitable for situations where production setup costs are high. Therefore, option A is the best choice for this situation.

What Lot-Sizing Technique Is Generally Preferred When Inventory Holding Costs