Asked by Jesus Armenta on Jul 17, 2024
Verified
Economies of scale in purchasing and ordering motivate a manager to
A) increase the lot size and cycle inventory.
B) decrease the lot size and cycle inventory.
C) eliminate inventory.
D) increase the lot size and reduce cycle inventory.
Economies of Scale
The cost advantage achieved by an increase in production volume that leads to a reduction in per-unit costs.
Cycle Inventory
The portion of inventory available due to the batching of orders, which rotates regularly and is used to meet consumer demand between replenishments.
Lot Size
The quantity of items that are processed or purchased at one time, affecting both inventory costs and manufacturing processes.
- Understand the elements that determine the buying price per unit and the impact of economies of scale on decisions related to inventory management.
- Understand how cycle inventory contributes to leveraging economies of scale and minimizing costs.
Verified Answer
Learning Objectives
- Understand the elements that determine the buying price per unit and the impact of economies of scale on decisions related to inventory management.
- Understand how cycle inventory contributes to leveraging economies of scale and minimizing costs.
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