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

Question

Quizplus · Accepted Answer

When inventory holding costs are extremely high, the lot-for-lot technique is generally preferred because it minimizes inventory holding costs by ordering only the exact amount needed to meet forecasted demand, without incurring excess inventory costs. The EOQ and POQ techniques may result in excess inventory, and the Wagner-Whitin algorithm is better suited for situations with set-up costs and variable demand. Therefore, A is the best choice for this scenario.

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