Improved Performance and Cost in Cyclic Production Systems

Abstract Increased competition has forced companies to focus more attention on producing at a globally competitive cost. To cope, firms focus on flexible manufacturing, integration, and automation to help ensure that firm-specific manufacturing environments remain competitive. Firms also focus on cost efficiencies, which enable them to be competitive over specific production runs and product life cycles. A common way of reducing cost at this level is to reduce set-up times. Previous research has shown that reduction of average machine setup time virtually guarantees lower production costs. The same is also true of the variance of machine setup time. However, recent research has found that reducing setup time, without any change in variance, can increase waiting time and work-in-process (WIP) inventory levels potentially reducing benefits from continuous improvement techniques. On the other hand, adding fixed idle time while holding the variance constant may reduce waiting time. The optimal fixed idle time depends only on the means and variances of setup, service, and arrival times. We show that an even greater reduction is achievable when the distribution of setup time is known by adding variable idle time, which is a non-increasing function of setup time, thereby reducing the combined setup time variance. We present procedures for finding the optimal variable idle time as a function of setup time. We also show how to implement our results.