Which of the following statements about lot- sizing rules for MRP is TRUE?
A) The lot- for- lot rule minimizes inventory investment, but maximizes the number of orders placed.
B) The periodic order quantity (POQ) rule generates a higher level of average inventory, because it creates inventory remnants.
C) In general, the fixed order quantity rule introduces greater instability into the production process.
D) FOQ reduces the amount of inventory on hand, by doing a better job of matching the order quantity the projected on- hand inventory quantity.

Question

Quizplus · Accepted Answer

The lot-for-lot rule minimizes inventory investment by ordering exactly what is needed for production, but it results in a higher number of orders being placed, as it does not consolidate orders.

Which of the Following Statements About Lot- Sizing Rules for MRP