Question

A setup reduction team has been working on a punch-press machine that currently takes 75
minutes for internal setup. Each part requires 1.5 minutes on the machine. The machine is not
a bottleneck, and the motivation for reducing setup time is to reduce the unit cost of the part
and to enable the machine operator to perform the setup. The labor rate for the operator is
$12.50 per hour. What must the setup time be reduced to for the lot size to be 10 units and the
average labor cost per unit to be $0.75?

Answer 1

Current internal setup time = 75 min

Time required for each part = 1.5 min

Labor rate of operator = $12.5 per hour

Lot size = 10 units

If average labor cost per units = $0.75

Then labor cost for a lot = $0.75*10 = $7.5

$12.5 provides 60 min of labor work

$7.5 will provide 7.5/12.5 * 60 = 36 min of labor work

So, 1 unit requires 1.5 min on the machine

So, 10 units will require 15 min on the machine

Now setup time = 36 - 15 = 21 min

If we want average labor cost per unit = $0.75, then setup time = 21 minutes

Reduction in setup time = 75 - 21 = 54 min

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