When determining lot sizes, consideration should be given to balancing which of the following costs?
When determining lot sizes, consideration should be given to balancing which of the following costs?
When determining lot sizes, consideration should be given to balancing ordering costs and carrying costs. Ordering costs are associated with the process of placing and receiving orders, while carrying costs are related to holding inventory over time. The goal is to find an optimal lot size that minimizes the total of these two costs.
The answer should be D. "In short, the EOQ is the order size that gives yo the lowest total cost for carrying cost and ordering (set up) costs. There's a need to balance these costs, because carrying costs tend to go up with larger order quantities while ordering costs tend to go down, since they respond to economies of scale."
D should be the answer
D should be the answer as lot size is determined through optimizing holding & ordering costs