The Use of Small Lot Sizes in Lean Operations Is

question 18

True/False

The use of small lot sizes in lean operations is in conflict with the EOQ approach since setup costs tend to be significantly higher than holding costs.

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Definitions:

Average Variable Cost

The total variable costs (costs that change with production volume) divided by the number of units produced.

Average Product of Labor

The output produced, on average, by one unit of labor, such as one worker or one hour of work.

Marginal Product of Labor

The additional output produced as a result of employing one more unit of labor.

Economies of Scale

The cost advantages that a business obtains due to expansion, where the average cost per unit of output decreases with increasing scale.