QMI has set up a standard order quantity of 5 for its medical ultrasound (01010), which is used to amortize setup costs. This information needs to be entered before rolling up the routing costs. The standard order quantity is entered in Item Planning Maintenance (1.4.7), or the Item Planning Data frame of Item Master Maintenance (1.4.1).

The standard order quantity should be what you will normally produce in a single lot, batch, or work order. In this case, the setup cost will be spread over the production of 5 units. The order quantity for each item is usually based on some aspect of production that is important to the company. A multiple of the units produced in an hour or a shift is common.

Some firms with high setup costs will want very large standard order quantities to spread the setup cost over many units of production. A just-in-time (JIT) environment typically invests in dedicated capacity in order to keep the order quantity or kanban very low.