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Do larger batches save more setup cost than they add inventory cost?

Compare annual setup spending and cycle-stock carrying cost for two feasible lot sizes.

Example scenario

Editable demonstration inputs, not verified industry benchmarks. Enable JavaScript to calculate your own scenario.

Annual unit demand
120,000
Current batch size
1,000 units
Proposed batch size
3,000 units
Cost / setup
$350
Inventory cost / unit
$20
Annual inventory holding cost rate
25 %
Annual savings from proposed batch size$23,000

Example result only, not a forecast or promise.

Current relevant annual cost
$44,500
Proposed relevant annual cost
$21,500
Additional average cycle-stock cash
$20,000

What to do with this result

Validate shelf life, replenishment lead time and line capacity; the cycle-stock approximation assumes stable demand and instantaneous batch receipt.

Know what is inside the model.

Planning model, not personalized financial advice. Your inputs remain in your browser.

Calculation method

Annual relevant cost = annual demand / batch size × setup cost + batch size / 2 × unit inventory cost × holding rate.

Assumptions and limitations

  • Example inputs are editable scenarios, not Aryo results or independently verified industry benchmarks.
  • Recovered capacity is not booked revenue or automatic cash savings. Validate the bottleneck, quality and demand before monetizing output.

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