Question

Does lot-for-lot ordering in MRP eliminate the holding costs for parts that are carried over to other periods?

1) True
2) False

Answer 1

Lot-for-lot ordering in MRP does not eliminate holding costs completely; parts carried over to other periods still incur some holding costs.

Step-by-step explanation:

The question is about whether lot-for-lot ordering in MRP (Material Requirements Planning) eliminates the holding costs for parts that are carried over to other periods. The answer is False. Lot-for-lot ordering is an inventory management strategy where exactly what is required for production is ordered, with no additional inventory. While this strategy can potentially minimize holding costs by not having excess inventory, it does not eliminate holding costs completely. Any parts that are not used immediately and carried over into the next period will still incur holding costs, however minimal they may be.