Economic lot sizes and their negative effect on processes

3 Economic lot sizes and their negative effect on processes 

The lot sizes calculated in this way are a classic example of the suboptimized performance process. These lot sizes extend the total process, the throughput times and tie up vast amounts of capital unnecessarily. 

A very successful plant and equipment manufacturer is the global market leader in technology in their particular supply segment despite a modest 25m in annual sales. Customers are even willing to wait for these extremely sophisticated systems until they are completed. 

This system plant and equipment manufacturer did not start designing, purchasing materials or production until the customer order had officially been b-sued. He was able to order, produce parts, and naturally assemble them to 100% per customer order. 

The fact that this company had a purchased parts stock worth millions may still be acceptable because of the lot sizes demanded from suppliers - at least that is how purchasing argued. 

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