Batch Size

The classic approach to batch size optimization is the Economic Order Quantity (EOQ) formula, adapted for manufacturing as the Economic Production Quantity (EPQ). The EPQ balances two opposing costs: setup cost (the cost of performing a changeover, including lost production time, labor, and material waste during startup) and holding cost (the cost of carrying inventory, including capital, storage, insurance, obsolescence, and handling). As batch size increases, the setup cost per unit decreases (the fixed setup cost is spread over more units), but holding cost increases (more inventory sits on the floor for longer). The EPQ formula finds the batch size that minimizes total cost: EPQ = sqrt(2DS / H × P/(P-D)), where D is demand rate, S is setup cost, H is holding cost per unit per period, and P is production rate. While the EPQ provides a useful starting point, lean thinking challenges the assumptions: instead of accepting setup cost as fixed, reduce it through SMED, which shifts the optimal batch size downward. The lean ideal is a batch size of one (one-piece flow), though this is only achievable when changeover time approaches zero.

Batch size has a direct, mathematical relationship with lead time through a concept called the batch transfer rule. If a batch of 100 units is produced with a 1-minute cycle time, the batch takes 100 minutes to complete. The first unit is finished after 1 minute, but it waits 99 minutes for the rest of the batch before moving to the next operation. If the batch size is reduced to 10, the first unit waits only 9 minutes — a 91% reduction in wait time at that operation. Across multiple operations, the effect compounds. This is why reducing batch size is one of the most powerful lead time reduction strategies. Transfer batches (also called move lots) offer a middle ground: produce in batches of 100 but transfer to the next operation in sub-batches of 10, so downstream operations can start sooner. This concept is implemented in scheduling by allowing operations to overlap rather than waiting for complete batch completion before starting the next step.

Batch size directly determines how many changeovers the production schedule must accommodate and how frequently each product is produced. With weekly production of 5 products and large batch sizes, each product might be produced once per week in a single large run. With small batch sizes, each product could be produced every day in small runs, enabling faster response to demand changes and shorter lead times. The scheduler's challenge is balancing the desire for small batches (flexibility, short lead times) against the reality of changeover constraints (changeovers consume time and capacity). LinePlanner helps schedulers make this trade-off visually: they can see how different batch sizes affect the production calendar, whether changeovers are bunching on bottleneck resources, and whether the schedule can accommodate the desired product mix frequency. As SMED initiatives reduce changeover times, schedulers can progressively reduce batch sizes, moving toward the lean ideal of frequent, small-batch, mixed-model production.