For the production lot size model to be appropriate, the relationship between D, annual demand, and P, maximum annual production rate, must be: A)D P. B)D = P. C)D

Question

For the production lot size model to be appropriate, the relationship between D, annual demand, and P, maximum annual production rate, must be:
A)D > P.
B)D = P.
C)D < P.
D)no necessary relationship exists.

Quizplus · Accepted Answer

The production lot size model is appropriate when the annual demand (D) is less than or equal to the maximum annual production rate (P). If D is greater than P, it would not be possible to produce enough to meet the demand, making the model incorrect. If D is equal to P, the model would result in producing exactly the demand each year, which may not be the most cost-effective option. Therefore, C is the correct answer, where D < P.

For the Production Lot Size Model to Be Appropriate, the Relationship