The purpose of this study is to find the analytic solution of determining the optimal capacity of processes and storages to meet the product demand. Recent trend to reduce product delivery time and to provide high quality product to customer requires the increasing capacity of storage facilities. However, the cost of constructing and operating storage facilities is becoming substantial because of increasing land value, environmental and safety concern. Therefore, reasonable decision making about the capacity of processes and storages is important subject for industries. The industrial solution for this subject is to use the classical economic lot sizing method, EOQ(Economic Order Quantity) model, trimmed with practical experience but the unrealistic assumption of EOQ model is not suitable for the chemical plant design with highly interlinked processes and storages. This study, a first systematic attempt for this subject, clearly overcomes the limitation of classical lot sizing method. The superstructure of the plant consists of the network of serially and/or parallelly interlinked processes and storages. A novel production and inventory analysis method, PSW(Periodic Square Wave) model, is applied. The objective function of optimization is minimizing the total cost composed of setup and inventory holding cost. The advantage of PSW model comes from the fact that the model provide a set of simple analytic solution in spite of realistic description of material flow between process and storage. The resulting simple analytic solution can greatly enhance the proper and quick investment decision for the preliminary plant design confronting diverse economic situation.