Why Are Lot Size Rules Important

question 5

Multiple Choice

Why are lot size rules important?

• A)They determine the frequency of setups
• B)They maximize shipping costs
• C)They are arbitrary
• D)They encourage on-time delivery
• E)They minimize scheduled receipts

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Definitions:

Barriers to Entry

Factors that prevent or impede the ability of a new competitor to enter and operate in an industry.

Monopoly

An economic condition where only one seller offers a distinctive product in the marketplace, with no similar alternatives available.

Natural Monopoly

A market condition where due to high fixed or start-up costs, efficient service is provided by a single firm instead of multiple competing firms, often seen in utilities sectors.

Fair-Return Price

For natural monopolies subject to rate (price) regulation, the price that would allow the regulated monopoly to earn a normal profit; a price equal to average total cost.