Consider a noninstantaneous replenishment situation in which the production rate is 100 units per day,the demand rate is four units per day,and the economic production lot size is 500 units.Which of the following statements is true?
A)The average cycle inventory is fewer than 225 units.
B)The average cycle inventory is greater than 300 units.
C)The rate of buildup in cycle inventory during the production cycle is fewer than 100 units per day.
D)The rate of buildup in cycle inventory during the production cycle is greater than or equal to 400 units per day.

Question

Quizplus · Accepted Answer

The economic production lot size (Q) is given as 500 units. The average cycle inventory can be calculated as Q/2 = 250 units. The production rate is 100 units per day and the demand rate is four units per day. Therefore, the rate of buildup in cycle inventory during the production cycle is (100 - 4) = 96 units per day. This is fewer than 100 units per day, so statement C is true. Statement A is false because the average cycle inventory is 250 units, which is greater than 225 units. Statement B and D are false because the average cycle inventory buildup rate is not greater than 300 units or 400 units per day, respectively.

Consider a Noninstantaneous Replenishment Situation in Which the Production Rate