The Lot-for-Lot (LFL) rule
A)Minimizes purchase or setup costs
B)Allows the firm to take advantage of quantity discounts (price breaks) by suppliers
C)Is best applied when inventory carrying costs are high and setup/order costs are low
D)Masks the true nature of dependent demand

Question

Quizplus · Accepted Answer

The Lot-for-Lot (LFL) rule minimizes inventory carrying costs by ordering only what is needed for immediate use, reducing the need for storage space and potential spoilage or obsolescence. However, it may not be the best choice when setup or order costs are high, as it can lead to frequent orders and additional setup costs. Additionally, LFL is used for independent demand items, not dependent demand items.

The Lot-For-Lot (LFL) Rule