Lot-for-Lot vs Fixed Batch Size: How Much to Make

Lot-for-lot means making (or buying) exactly what each period needs, no more: if next week's orders need 620 bags, you make 620. A fixed batch size means always making a set amount, like a full mixer, a full kettle or a 1,500-bag run, and carrying what's left into the next period. Lot-for-lot leaves nothing on the shelf but means more setups; fixed batches mean fewer setups but stock that has to keep. A third common rule, period ordering, makes several weeks' needs at once. The right choice depends on what a setup costs, what holding stock costs, and above all on shelf life. Below are six weeks worked through all three ways, and when each one fits.

The short version

• Lot-for-lot: make exactly each period's need. No leftovers; the most setups.
• Fixed batch: make a set amount every time. Fewer setups; stock carried forward.
• Period ordering: make two or more periods' needs in one go.
• Setups cost (heating, cleaning, changeovers); holding stock costs (cash, space, spoilage).
• Shelf life comes first: a fresh product can only be made lot-for-lot.
• Equipment sets real batch sizes: plan in whole batches.
• TaroStack plans what's needed and rounds to your whole batches. More below.

The three rules side by side

"Net need" means what's required after counting what's already on the shelf and already planned. Lot-for-lot is the default in many planning systems because it's the simplest and leaves the least behind.

Six weeks, three ways

Windward Roots, the made-up taro business I use in these examples, plans its taro chips. Orders and forecast for the next six weeks:

A production run (heating the oil, frying, cleaning down) costs about $60 to set up, whatever the size. Holding a bag for a week costs about a cent: 25% a year of its $2.10 cost is about $0.01 a week.

Lot-for-lot: a run every week, making exactly 620, 700, 760, 640, 820 and 700.

Every two weeks: a run in weeks 1, 3 and 5, making 1,320, 1,400 and 1,520; each second week's bags sit for a week.

Fixed 1,500-bag run: a run whenever stock won't cover the week, in weeks 1, 3 and 5, carrying what's left.

For chips, which keep 90 days and cost little to hold, combining two weeks into one run saves about $159 over six weeks against lot-for-lot. The fixed run costs a little more and leaves 260 bags carried into week 7, which is fine for chips and a problem for anything with a short life. How the yearly version of this trade-off works for buying is in economic order quantity.

When shelf life decides

Run the same sum for fresh taro sweet bread, which sells for two days. Combining two weeks into one bake isn't a cheaper option, it's a bin full of stale bread. For anything with a short life, lot-for-lot (often day by day) is the only rule, and the job becomes making setups cheaper rather than fewer: dough made the night before, a bake schedule that keeps the oven full. A store's minimum shelf life at delivery tightens it further, covered in minimum remaining shelf life.

When equipment decides

Real kitchens make in whole batches: a 60-quart mixer makes 48 loaves of dough, a kettle makes 37 jars of jam, a fryer load is 5 kg of taro. So even lot-for-lot gets rounded up to whole batches: need 110 loaves, make three batches of 48, which is 144, and plan the 34 extra into tomorrow or a second product. That's lot-for-lot with a batch multiple, and it's how a small kitchen really plans. How much the kitchen can make in a week at all is in how to calculate production capacity.

Where this stops working

Working this out by hand for one product for six weeks is a pleasant half hour. For twenty products sharing a fryer and an oven, with orders changing every day, shelf lives from two days to a year, and ingredients that have to arrive before each run, it's the job that doesn't get done, so the kitchen makes "the usual" and finds out on Friday what ran short and what's left over.

How TaroStack does it

TaroStack plans how much to make and buy across every product, the way the example does, and keeps it current as orders change.

What's needed, when. Planning turns your orders and your own sales history into what to make and what to buy, out to the horizon you choose, counting what's on the shelf and what's already planned. Forecasts fill from your own history rather than being typed from scratch, and safety stock and minimum and maximum levels are set per item and per site.

In whole batches. Set a minimum quantity and a multiple, like 48 loaves for the mixer, and planning rounds each suggestion up to whole batches. Recipes hold their batch size and the hours a batch takes on its work center, so a week's plan doesn't promise more fryer or oven time than you have, and a week's schedule per site lays it out.

Shelf life first. Planning is shelf-life aware: its exceptions say in plain words what will run short, arrive too late, or expire before it's used, and a batch made too early for a customer's minimum days-left is flagged before it's made. Every suggestion is a draft you approve, and the purchases it suggests for ingredients use each supplier's lead time, so the taro arrives before the run.

Planning, recipes, batches and work centers are on Standard at $99 a month; stock, lots and the reorder list are on every plan, from $49. The first 30 days are free, with no credit card, and everything is included during the trial. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

What is the lot-for-lot method?

A lot-sizing rule that makes or buys exactly what each period needs, after counting what's on hand and already planned. It leaves no leftover stock but needs a setup or an order every period.

What is the difference between lot-for-lot and fixed order quantity?

Lot-for-lot matches each period's need exactly; fixed order quantity makes or buys the same amount every time and carries the extra forward. Fixed quantities mean fewer setups and more stock on the shelf.

When should you use lot-for-lot?

For fresh or short-life products, made-to-order goods, expensive items and anything where setups are cheap. For long-life goods with costly setups, combining periods or a fixed batch is usually cheaper.

How does shelf life affect lot sizing?

It caps it. You can't make more than will sell before its date, so short-life products are made lot-for-lot, often day by day, whatever the setup cost.