Question

Under lot-for-lot, order sizes for component parts are essentially determined directly from which one of the following? a. gross requirements b. net requirements c. economic order quantity d. amount on-hande. planned order release

Answer 1

Answer: b. Net requirements

Explanation: Lot sizing is used to consolidate the calculated net requirements by a certain unit. It puts into consideration cost reduction and work efficiency. One method of lot sizing is the lot-for-lot where the net requirements occurring for each period are the order quantity which generates greater volume of orders with smaller quantities per order and inventory investment as a result of ordering exact requirements only. The order sizes for component parts are essentially determined directly from net requirements.