Imagine Comparing a Manufacturing Operation Using Regular Lot-Sizing and the Same

Imagine comparing a manufacturing operation using regular lot-sizing and the same operation with a kanban/lean production approach. What would be your expectations of the difference between the total cost (i.e., inventory holding costs + setup/ordering costs) of each?

A) Inventory holding cost will increase nonlinearly with inventory.
B) Total costs will be lower for the regular lot-size operation.
C) Total costs will be lower for the kanban/lean production operation.
D) The order quantity will be larger for the kanban/lean production approach.
E) As long as the total quantity is the same, total costs will be the same.

Correct Answer:

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