What Lot-Sizing Technique Is Generally Preferred When Inventory Holding Costs

question 176

Multiple Choice

What lot-sizing technique is generally preferred when inventory holding costs are extremely high?

• A) lot-for-lot
• B) EOQ
• C) part-period balancing
• D) the Wagner-Whitin algorithm
• E) quantity discounting

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Definitions:

FIFO

An inventory valuation method where the first items purchased or produced are the first ones sold, affecting the costs of goods sold and ending inventory.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overheads, interest, taxes, and other expenses.

FIFO

First In, First Out, an inventory valuation method where the earliest items added to inventory are the first to be removed, impacting cost of goods sold and inventory valuation.

Costs

The expenses incurred in acquiring or producing goods and services.