Selection of the lot size rule to be used should be based on minimizing ____________________.
A) the order size
B) late shipments
C) total processing time
D) quality problems
E) the sum of ordering and carrying costs

Question

Quizplus · Accepted Answer

The most commonly used lot size rules are economic order quantity (EOQ) and production quantity (PQ) models. The selection between these two models should be based on minimizing the sum of ordering and carrying costs. Therefore, the correct answer is E. Minimizing the order size would only be a concern if it led to higher costs, such as increased ordering costs. Late shipments and quality problems are not related to lot size rules. Total processing time is important, but it is not the primary consideration when selecting a lot size rule.

Selection of the Lot Size Rule to Be Used Should