Economical lot size

The lot size plays an important role in determining costs in individual and small series production. This is because setup times in machine shops can account for a significant portion, from 10% to 100% of execution times. It is therefore crucial to take measures to reduce set-up times and the associated costs before such high set-up costs can be accepted. Reducing set-up times enables economical production in smaller batches and helps to significantly reduce inventory.

When producing in batch sizes and continuous consumption, the batch-dependent storage costs (space and interest costs) increase in proportion to the lot size , while the set-up costs per part decrease according to a normal hyperbola.78