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Batch size reflects the average batch size used within the factory. Larger batch sizes will proportionately reduce the number of setups and hence increase available capacity. However this comes at the cost of increasing production lead time and possibly decreasing delivery performance. A balance must be found which fits with the overall strategy of the firm.
The curve below gives some idea of the tradeoffs involved in MikesBikes-Advanced.
Note: The Just-In-Time philosophy would suggest that batch size be reduced to improve responsiveness, but this has a cost in capacity.