‘End the practice of awarding business on the basis of price tag. Without adequate measure of quality and service, business drifts to the lowest bidder… low quality and high total cost being the inevitable result. Instead, minimize total cost!’
Translate this ‘minimize cost’ to ‘optimum batch size’ … see below. When automation is used, the transaction cost is lower; when batch size is smaller, the transaction cost is lower. Total cost on both instances is minimized. The holding cost remains steady.