The GATE Grind

GATE 2020 ME (ME2) – Question 23

Production Planning and Control · Aggregate production planning, scheduling and material requirement planning · 1 mark · Multiple choice

In Materials Requirement Planning, inventory holding cost is very high and setup cost is zero. Which lot-sizing approach should be used?

  1. Economic Order Quantity
  2. Lot-for-Lot
  3. Base Stock Level
  4. Fixed Period Quantity, for 2 periods

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Show answer and explanation

Correct answer: (B) Lot-for-Lot

Explanation

With no setup penalty there is no saving from combining periods. High holding cost makes early production expensive. Lot-for-lot supplies exactly each period’s net requirement and avoids unnecessary carryover. **Answer:B**.