A certain product has been effectively managed in the past, according to its managers. The previous technique used the economic production quantity model, and resulted in an optimum lot size of 100
For this product, setup time is directly proportional to setup cost, and setup time is currently 40 minutes per batch. How much must setup time decline in order for the lot size to fall to 50 units? 25 units? 10 units?
Complete data for the problem is not necessary. To cut the lot size in half, S must be cut to 25 percent of its previous value, or from 40 minutes to 10 minutes. The reduction of lot size to 25 units requires another reduction by a factor of four, to 2.5 minutes. Reducing the lot size by a factor of ten requires the reduction in setup time by a factor of 100, the equivalent of 0.4 minutes.
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