224 THE BELL SYSTEM TECHNICAL JOURNAL, JANUARY 1954 



and more variants are required in the over-all general structure, the 

 number of set-ups will increase to the point where the economical manu- 

 facture of the part is seriously penalized. Thus a point will be reached 

 where it is advantageous to make mol:"e parts than are immediately 

 needed, and store the remainder, so as to avoid excessive cost of shut- 

 downs. vVhen the variable effects of (a) set-up costs and (b) inventory 

 costs are fully considered, the ideal quantity to manufacture in one lot 

 may then be found by comparing the results of (a) and (b), as will now 

 be shown. The costs which correspond to these ideal quantities will 

 immediately follow. 



1.21 Lot-Size Costs 



In manufacturing practice there are two outstanding expenses which 

 may affect the cost of any particular item which is classed as a code, or 

 kind, of the basic family of articles. These are the administration costs, 

 and the set-up costs. 



1.211 Administration Costs 



For certain kinds of operations there is a considerable amount of 

 paper- work, drafting, checking, etc. to naintain in normal up-to-date 

 condition. Occasionally, this cost is enough to influence the cost of the 



°- 0.01 



22 2A 26 



34 36 38 40 42 



WIRE GAUGE 



Fig. 2 — Typical winding costs. 



