You'll want an ample water source. The first inclination is to use a well, but a well can only hold 125kg of water, and takes 15 minutes to replenish.

I recommend a water storage solution. A good choice is the huge tub, because it holds 2250kg and the replenish enchant can be cast on it so that it refills with water. A container with a replenish cast of 50 will add .50kg of water every 30 seconds. Note that while a huge oil barrel can also hold 2250kg, it cannot be enchanted with replenish.

A smaller alternative to a huge tub is the large barrel, which can hold 250kg. It would take 9 large barrels to equal 2250kg of water storage.

If your settlement is near a natural water source, like a lake or the ocean, you can fill your water containers at the source, but this adds multiple steps to the process of making lye.

Ash is a natural byproduct of furnaces (forge, oven, campfire, smelter, etc.). While a furnace is burning fuel, ash will appear in the furnace's inventory. When ash reaches 6.4kg it will stop accumulating.

As you work at a furnace, drag ash to a container frequently to allow more ash to be made. If you get in the habit of moving ash you will have a large store of it for lye making.

Your inventory can have a maximum of 100 items. The number of items you are carrying will determine the number of ash you can add to your inventory. You can mitigate this issue by using a container in your inventory for the ash (explained below).

I recommend at least one mixing container. Two (one for water, one for ash) will save you the hassle of dealing with inventory limits. I recommend two cauldrons for maximum batch size, but you can use small barrels or any liquid container, they'll just create smaller batches of lye.

Lye can be stored in most any liquid container, but it does decay over time. I store my lye in huge oil barrels because they can hold 2250kg. If I am not going to be using it for a long time (over a year) I'll seal it in small barrels (with pegs), but I typically use it before it decays away.

* The maximum amount of ash that can be combined is 64 ash or 6.4kg, limiting the max batch size to 64kg.

• 1 water = 1kg
  • 64 waters = 64kg of water
  • Water (and liquid in general) is always in a combined state
• 1 ash = .10kg
  • 64 individual ash items at .10kg each totals 6.4kg
  • Multiple ash must be combined into one item to make a large batch of lye
  • 64 ash combined is one 6.4kg ash item (6.4kg is the max ash can be combined into)
  • Ash in a bulk container is measured by volume, not kg

• The cauldron is the best choice for making batches of lye, as it holds exactly 64 lye. 64kg is the maximum amount of lye you can make in a batch due to the ash combine limitation of 6.4kg.
• You can use the crafting window (B key) to craft lye, but I prefer not to use it as it adds more steps.
• I use a second cauldron for the ash to simplify the process. Often a player cannot carry the ash needed for the batch. The second cauldron eliminates the need to drop items from inventory to make room for the ash. It also has the added benefit of saving some steps in the process as you typically have to drag ash to inventory more than once and combine it more than once to get the full 64 (6.4kg) ash. Dragging ash directly to a cauldron in your inventory will move the full 64 (6.4kg) ash in one step.

• Two cauldrons in your inventory
• The lye recipe calls for equal parts water and ash.
  • At least 6.4kg of ash (64.00 volume) in a container nearby
  • A water source or 64kg of water in a container nearby
• A storage container for the lye

1. Drag water to one cauldron to fill it (64 waters or 64kg).
2. Drag ash to the other cauldron to fill it (64 ash or 6.4kg).
3. The stack of ash must be combined. There are three methods you can use to combine ash.
   1. Drag the ash stack (in the cauldron) to a crafting window slot (B key opens crafting window) and click the tiny white Combine button next to the slot.
   2. Open the cauldron with ash in it and double-click the ash stack header to activate one item in the stack (the topmost ash item turns green). Open the stack so you can see the individual ash items. Click the first ash item in the stack to select it, then scroll down to the bottom. Hold SHIFT and click the last ash item to select the stack. The stack is now highlighted in blue; selected. Right click on the selection and Combine.
   3. [Recommended] Use a Combine key bind. Open the ash cauldron and double-click the ash stack header to activate one item in the stack, then use your Combine key on the stack header to combine.
4. The combined ash item should be activated (green) from step 3. If not, activate it with a double click. 5. Right click the water in the water cauldron and Create → Alchemy → Lye. OR use a Craft key bind (requires Custom Actions mod) while hovering your mouse pointer over the stack header.
5. You now have 64kg of lye. Offload the lye into a larger liquid container.
   

Repeat the process to make as many batches as you need.

The process is the same as with cauldrons. The only difference is the small barrel holds 45kg water/45 ash vs the cauldron, resulting in 45kg of lye.

Using cauldrons yields 19kg more than small barrels each batch, which adds up. If you don't have cauldrons and/or are working on a smaller project, small barrels will do just fine.

When I'm making a lot of lye I'll bind a key to the create action using the Custom Actions mod so I don't have to use the right click menu. I then simply hover over the water (with the combined ash active; green) and press my craft key bind.

Here is my bind:

bind space "act 10073 hover"

I use a Combine key bind to speed up my workflow.

1. Press ESC and go into Settings. The Settings window opens.
2. Navigate to the Keybinds tab, and under that the Item tab.
3. Set a key to Combine. The Mod dropdown can be used to assign a “shift” key combination.
4. Click Save.
5. Go back to the game.
6. Double click the stack header first to have at least one item in the stack activated.
7. Use the combine key bind on the stack header and it will combine the stack into one item.

I use my Combine key bind whenever I need to combine a resource stack. It saves so much time.