Economies of scale in purchasing and ordering motivate a manager to
A)increase the lot size and cycle inventory.
B)decrease the lot size and cycle inventory.
C)eliminate inventory.
D)increase the lot size and reduce cycle inventory.

Question

Quizplus · Accepted Answer

Economies of scale in purchasing and ordering often mean that buying in larger quantities can reduce the cost per unit. This motivates a manager to increase the lot size, which in turn increases the cycle inventory, as more items are held in stock before they are sold or used in production.

Economies of Scale in Purchasing and Ordering Motivate a Manager