Lot size is the amount of a good produced at the one time. Lot size is an important issue in lean manufacturing, as large lot sizes and high setup costs drive batch production and ‘push’ stock into the supply chain. As an example, supposing a salesperson asks for 250 business cards, being a year’s forecast usage, but is told that the most economic print run is 500 cards. The setup cost causes two years inventory to be held, and most likely the salesperson will change job before the cards run out. Reducing lot size and setup costs allows small batches to be produced and goods to be ‘pulled’ through the supply chain. See also Economic Order Quantity.« Back to Glossary Index
Discover the world’s largest Glossary of Procurement terms
With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.