The process of figuring out the ideal order quantity of inventory that should be manufactured or acquired is known as lot sizing. It is crucial in striking a balance between holding costs (such as capital and storage expenses) and ordering costs (such as setup or transportation). Based on business needs and demand variability, a variety of strategies are employed, including Fixed Order Quantity (FOQ), Lot-for-Lot (LFL), and Economic Order Quantity (EOQ). Appropriate lot sizing contributes to overall inventory optimization by preventing excess inventory, cutting waste, and guaranteeing consistent product availability.
