Batch Size Optimisation Calculator

Work out batch size optimisation instantly with clear inputs, formula shown and shareable results.

About Batch Size Optimisation Calculator

The economic batch quantity balances setup cost against inventory holding cost: EBQ = sqrt(2 x annual demand x setup cost / annual holding cost per unit). Holding cost per unit is unit value times the carrying rate, which covers capital, storage, insurance and obsolescence.

Formulas

Economic batch quantity

EBQ = sqrt(2 x D x S / H) where H = unit cost x holding rate

Total cost

Total relevant cost = (D / Q) x S + (Q / 2) x H

Worked example

With the default values below, Batch Size Optimisation Calculator returns Economic Batch Size of 3,000. Change any input above and every figure here is recalculated in your browser.

Inputs used

Annual Demandminimum 1 units: 24,000 units
Setup Or Order Costminimum 0.01 per batch: 4,500 per batch
Unit Costminimum 0.01: 120
Annual Holding Cost Rateaccepts 0.1–100 %: 20 %

Results

Economic Batch Size: 3,000
Batches Per Year: 8.00
Annual Setup Plus Holding Cost: $72,000.00
Annual Holding Cost Per Unit: $24.000

Step by step

1Values used
2Economic batch quantity
3Total cost
4Economic Batch Size= 3,000
5Batches Per Year= 8.00
6Annual Setup Plus Holding Cost= 72,000.00
7Annual Holding Cost Per Unit= 24.000

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation or tax into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why is the total cost curve so flat near the optimum?

Setup and holding costs move in opposite directions, so a batch size 30% off the optimum typically raises total cost by under 5%. Round to convenient pack or pallet quantities without much penalty.

What if setup time can be reduced?

The optimal batch shrinks with the square root of setup cost. Halving setup cost cuts the batch by 29%, which is the mathematical case for quick changeover work.