Set up time and Economic Lot Size. As discussed above, the set up time is taken once for each lot or batch pf parts. ‘economic lot size’. The economic lot size (which will be discussed in detail in the next chapter) gives the number of parts to be produced for each set up that will result in lowest cost per part. It is usually determined by comparing the cost of set up, tooling, handling and carrying charge (interest, taxes, insurance and obsolescence etc.) with the cost of storing the finished product. The economic lot size may be found from the following approximate relation :
N =5√(AS/KC)