Operation Time versus Operation Cost, or the Effect of Varying Setup Time and Batch Size
This exercise will help to illustrate the need to find a balance between (1) short lead time, and (2) low cost, for any operation. These two factors are determined by setup time and batch size. You will find the effect of setup time and batch size on
a. The operation time, which is a measure of the lead time of the order.
b. The operation time per unit (that is, operation time divided by batch size), which is a measure of the cost of the operation and therefore of the cost of the production or procurement order.
Solve the following tasks:
(0) First, suppose a setup time of 200 , a run time per unit of 100 , and a batch size of 4 . Calculate the operation time and the operation time per unit.
(1) If batch size is increased to 20 , what are the effects on operation time and operation time per unit? In your opinion, what effects are positive or negative?
(2) Suppose that because of the hard work of the process engineers (e.g., by applying SMED measures), setup time could be reduced to 100 . What is the effect of this, if the batch size is maintained at 20 ?
(3) To what extent can the batch size be reduced after the reduction of setup time to 100 , so that the operation time does not exceed the original operation time of 600 ? What will the operation time per unit be?
(4) To what extent can the batch size be reduced after the reduction of setup time to 100 , so that the operation time per unit does not exceed the original time per unit of 150 ? What will the operation time be?