For analysis using the economic production lot size (ELS) model to be useful, the producer must be able to produce the item faster than it is consumed.

Question

Quizplus · Accepted Answer

This statement is true. The economic production lot size model assumes that the producer is able to produce the item faster than it is consumed in order to minimize production and inventory costs. If the producer is not able to produce the item faster than it is consumed, the assumptions of the ELS model would not hold and alternate production and inventory models would need to be considered.

For Analysis Using the Economic Production Lot Size (ELS) Model