Management wishes to use a POQ lot-sizing rule for an item that experiences an average demand of 30 units per week. If the desired average lot size is 120 units, what should P be?
A) zero or one week
B) two or three weeks
C) four or five weeks
D) more than five weeks

Question

Quizplus · Accepted Answer

Using the POQ formula: POQ = sqrt((2DS)/H)
D = 30 (average demand per week)
S = 120 (desired average lot size)
H = 52 (number of weeks in a year)

POQ = sqrt((2 × 30 × 120)/52) ≈ 11.54

Since P = POQ/D,

P = 11.54/30 ≈ 0.38

Therefore, P should be four or five weeks (Choice C) to achieve the desired average lot size of 120 units.

Management Wishes to Use a POQ Lot-Sizing Rule for an Item