The correct answer is: D. All of the above
The material utilization rate is the most important factor in determining the maximum limit, minimum limit, and re-ordering level.
The maximum limit is the highest level of inventory that should be maintained. It is important to set a maximum limit to avoid overstocking, which can lead to costs associated with storage, obsolescence, and damage.
The minimum limit is the lowest level of inventory that should be maintained. It is important to set a minimum limit to avoid stockouts, which can lead to lost sales and customer dissatisfaction.
The re-ordering level is the level of inventory at which a new order should be placed. It is important to set a re-ordering level to ensure that inventory levels are always within the desired range.
The material utilization rate is a measure of how efficiently a company uses its materials. It is calculated by dividing the output of a product by the input of materials. A high material utilization rate indicates that a company is using its materials efficiently. A low material utilization rate indicates that a company is wasting materials.
The material utilization rate is an important factor in determining the maximum limit, minimum limit, and re-ordering level because it affects the cost of inventory. A high material utilization rate means that a company can produce more products with the same amount of materials. This means that the company can maintain a lower inventory level without risking stockouts. A low material utilization rate means that a company needs to maintain a higher inventory level to avoid stockouts.
The material utilization rate is also an important factor in determining the cost of production. A high material utilization rate means that a company uses less materials to produce a product. This means that the company’s production costs are lower. A low material utilization rate means that a company uses more materials to produce a product. This means that the company’s production costs are higher.