Costs of setting up a production run are analogous to ordering costs in the Economic Order Quantity (EOQ)model.

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In both cases, there is a fixed cost associated with setting up or ordering, which includes tasks such as preparing equipment, arranging materials, and coordinating labor. These costs are incurred each time a production run or order is initiated and are independent of the size of the run or order. Therefore, reducing the frequency of setups or orders can help minimize the total cost of production or inventory management.

Costs of Setting Up a Production Run Are Analogous to Ordering