Average of Production Lots

[RogerCooper]

I came across the following curious situation at work. I need to compute the average lot size of parts being produced. The obvious thing would be to divided the total number produced by the number of orders. However, my interest involves setup costs, so it is more logical to ask for the each produced, what was the average size of the lot it was part of. As I understand it, I should sum the squares of the lot sizes and then divide by the total quantity.

For example if there were 2 lots made in the quantities of 1 and 100, the result would 10,001/101 or about 99. Is this the correct approach? Is there a name for this type of weighted average?

 

[gemma-the-husky]

There's a line of best fit that uses squares to evaluate the line.
I'm sure there are other techniques that use squares.
It's a matter of finding the most effective metric for your needs. eg - a batch of one sounds inefficient but it depends on other factors, I imnagine.

Don't you need linear programming to find the most effective production cycle taking into account batch sizes, set up costs and so on. It's a long time since I've done any so I may have the wrong end of the stick.

 

[arnelgp]

i am sure your company has "standards".
so it is best to ask supv in production area
how they compute setup cost.

remember, your business rule first.