Minimum Batch Size Calculator: Setup Cost Per Unit and Break-Even Lot
Every changeover has a price: stopped machine time, crew time and the scrap before the first good part. This calculator spreads that cost over the batch and tells you the minimum batch size that keeps setup below the share of unit cost you can tolerate.
Your numbers
Machine stopped time from last good part to first good part, including first article approval.
Burdened hourly cost of the machine and the setup crew while it is down.
Labor and machine cost per good unit, excluding setup and material.
Your results
This ignores inventory carrying cost, which rises with batch size. Use an EOQ or EPQ calculation if you need the cost minimising lot rather than a setup share target.
Setup cost per unit vs batch size
Sweeps Current batch size from 25 to 2000, holding your other inputs fixed.
Compare routing setup standards with actuals
Optional: we can show how setup times in your ERP routings compare with actual changeovers recorded on the floor.
Optional. The tool and every export work without this. No spam.
How to use it
Measure the changeover from the last good part of the previous job to the first approved part of the next, not the time the setter was physically at the machine. Use a burdened hourly rate that includes the machine and the crew. Enter the scrap you typically lose before the process settles, the material cost per unit and the run conversion cost. Set the setup share you consider acceptable and read off the minimum batch.
- Use an average of recent changeovers, not the best one
- Include first article inspection time in the duration
- Run conversion cost excludes material and setup
- Revisit the target share by product family
The math
Setup cost = duration times rate plus scrap times material cost. Per unit, it is that figure divided by the batch size. Setup share = setup per unit / (run cost + setup per unit). Solving for the batch at a target share t gives batch = setup cost times (100 - t) / (t times run cost). With a 1.5 hour setup at 95 an hour plus 4 scrap units at 12, the setup costs 190.50, and a 5 percent share on 8 of run cost needs about 453 units.
What the answer means for scheduling
A minimum batch is a guide to where small lots become uneconomic, not a rule. If the number is far above demand, the better lever is usually SMED style setup reduction, because halving the changeover halves the minimum batch. Compare it with the lot size parameters in your ERP: a fixed lot size or minimum lot size that is far below this figure is quietly costing money on every order.
Common mistakes
Do not use the standard setup time in the routing without checking it against actual. Standards are often optimistic or years old. Do not forget internal setup that blocks the machine versus external setup that can be done while it runs; only the blocking part belongs in the cost. And remember that a larger batch increases WIP and lead time, so this is one side of a trade off.
Frequently Asked Questions
Is minimum batch size the same as EOQ?
No. EOQ balances ordering or setup cost against carrying cost to find the lowest total cost lot. The minimum batch here only asks how large the lot must be to keep setup below a target share of unit cost. It ignores carrying cost.
What setup share is reasonable?
It depends on the margin and the product. High volume repeat parts often target a few percent, while low volume high mix work may accept 15 to 20 percent. Use the share that your pricing and margin can absorb.
Should scrap be included in setup cost?
Yes, when the scrap is caused by the changeover, such as startup parts, purge material or test pieces. Scrap that occurs randomly during the run belongs in the run cost or yield, not the setup cost.
How do I reduce the minimum batch size?
Shorten the changeover, since the minimum batch scales with it. Convert internal setup steps to external ones, standardise tooling and fixtures, and prepare the next job while the current one runs. That is the core idea of SMED.
If your ERP routings hold setup standards, we can compare them to actual changeover times from shop floor transactions and flag the products where lot sizes no longer make sense.
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