A single machine is available which can make all the products, but not in a perfectly interchangeable way. Instead the machine needs to be set up to produce one product, incurring a setup cost and/or setup time, after which it will produce this product at a known rate formula_2. When it is desired to produce a different product, the machine is stopped and another costly setup is required to begin producing the next product. Let formula_3 be the setup cost when switching from product i to product j and inventory cost formula_4 is charged based on average inventory level of each item. N is the number of runs made, U the use rate, L the lot size and T the planning period.