How many units of capacity should be built to minimize the total cost of providing capacity plus lost sales?

To minimize the total cost of providing capacity plus lost sales, you should analyze the demand forecast, variable costs of capacity, and the cost associated with lost sales. Typically, the optimal capacity is reached when the marginal cost of providing an additional unit of capacity equals the marginal cost of lost sales. This involves using demand elasticity and cost data to determine the precise point. Conducting a cost-benefit analysis can help identify the ideal number of units to build.