APICS CSCP Exam - Topic 3 Question 99 Discussion

Actual exam question for APICS's CSCP exam

Question #: 99
Topic #: 3

[All CSCP Questions]

Which of the following outcomes is most likely to result when lot size increases?

ASetup costs will increase.

BInventory carrying cost will increase.

COperating expenses will increase.

DTotal profit will increase.

Show Suggested Answer

Suggested Answer: B

When lot size increases, the number of units ordered in each batch grows, leading to several outcomes:

Inventory Levels: As lot size increases, more inventory is held at any given time. This results in higher average inventory levels.

Carrying Costs: Inventory carrying costs include storage, insurance, handling, and obsolescence. With more inventory on hand due to larger lot sizes, these costs increase proportionally.

Setup Costs: While larger lot sizes can reduce the frequency of setups, thereby reducing setup costs, the increase in carrying costs due to holding more inventory typically outweighs the setup cost savings.

Operating Expenses and Total Profit: Operating expenses might not necessarily increase with lot size, and total profit is not directly influenced by lot size alone but by a combination of factors like sales, costs, and efficiency.

Therefore, increasing lot size primarily leads to an increase in inventory carrying costs.

Silver, Edward A., David F. Pyke, and Rein Peterson. 'Inventory Management and Production Planning and Scheduling.' Wiley.

Chopra, Sunil, and Peter Meindl. 'Supply Chain Management: Strategy, Planning, and Operation.' Pearson.

by Annita at Sep 18, 2024, 01:21 AM

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Aileen

3 months ago

D could happen, but only if sales increase too!

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Roy

3 months ago

Setup costs might go up too, but B makes more sense.

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Hermila

3 months ago

Wait, are we sure about that? Seems off.

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Polly

4 months ago

Totally agree, B is the right choice!

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Noel

4 months ago

Inventory carrying cost will definitely increase.

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In

4 months ago

I’m torn between B and D; while I see how carrying costs could rise, I also think that larger lots might boost total profit if managed well.

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Zachary

4 months ago

I feel like option B makes the most sense since more inventory typically means higher carrying costs, but I wonder if there are exceptions.

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Franklyn

4 months ago

I think we practiced a question like this, and I recall that larger lot sizes can sometimes reduce setup costs per unit, but I'm confused about the overall impact on expenses.

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Gilberto

5 months ago

I remember discussing how increasing lot size usually leads to higher inventory carrying costs, but I'm not entirely sure if that's the only outcome.

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Natalya

5 months ago

I feel pretty confident about this one. Increasing lot size is going to lead to higher inventory levels, which directly translates to higher inventory carrying costs. B is the right answer.

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Aaron

5 months ago

I'm a little confused on this one. Does increasing lot size affect setup costs or operating expenses too? I want to make sure I understand all the potential impacts before answering.

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Ligia

5 months ago

Okay, let's see. If lot size increases, that means we'll have more inventory on hand. And more inventory means higher carrying costs, like storage and insurance. So I'm going with B.

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Hana

5 months ago

Hmm, I'm not totally sure about this one. I'll have to think it through carefully. Maybe I should review my notes on inventory management first.

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Halina

5 months ago

This one seems pretty straightforward. I think the answer is B - inventory carrying cost will increase.

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Mattie

5 months ago

Hmm, I'm a little unsure about this one. The wording is a bit ambiguous, and I'm not entirely clear on the specific cost differences and user thresholds between the two services. I'll need to re-read the question carefully before selecting an answer.

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