Economic Batch Size

Economic Batch Size refers to the optimal quantity of products a company should produce in one production run to minimize total costs. It balances production setup costs (like preparing machines) with the costs of holding inventory (storing unsold items). Producing too many at once increases storage costs, while producing too few leads to frequent setup expenses. The economic batch size finds the sweet spot where the combined costs are lowest, ensuring efficient production and inventory management. This concept helps businesses optimize their manufacturing process to save resources and improve overall efficiency.