Setup Reduction and Increased Effective Capacity

Abstract

Setup reduction is an important aspect of the Just-In-Time (JIT) and Zero Inventory (ZI) concepts. This paper looks at the increased effective capacity that results from setup reduction. A certain amount of time, as well as expense, is required for each setup within a multiproduct firm. By reducing the time required for setups, less time is required to carry out those setups. That time can either be used to reduce lot sizes or to reduce overtime. We use an EOQ-like setting with stationary deterministic demand rates for each product. This simple model allows explicit solutions to be derived, not only for optimal setup time reduction, but for optimal overtime as well. Numerical examples illustrate the results.