Question

In inventory planning, extra inventory is unnecessarily carried to the end of the planning period when using which of the following lot size decision policies?

• A. Part period total cost balancing
• B. EOQ lot size
• C. Lot-for-lot Production
• D. EPQ lot size

Answer 1

Answer:

B. EOQ lot size

In inventory planning, extra inventory is unnecessarily carried to the end of the planning period when using the EOQ (Economic Order Quantity) lot size decision policy. The EOQ model determines the optimal order quantity that minimizes the total inventory costs, including ordering and holding costs. However, it does not necessarily align the order quantity with actual demand, potentially leading to excess inventory at the end of the planning period.