The effects of varying set-up costs

The concept of zero inventory (ZI) is a powerful tool to improve production economics. The major factor in ZI is set-up cost reduction. Examines what will happen when set-up costs are stationarily and non-stationarily reduced by mathematical presentations and simulation. The results are useful for real practice. Zangwill observes that reducing set-up costs need not decrease inventory by a special example of non-stationary cases. Likewise, set-up cost reduction need not decrease total production and inventory costs. By using simulation, obtains results contrary to Zangwill. most presentations of set-up cost reduction consider the stationary case. It is hard to find the degree of cost variations by mathematical models. This paper uses a mathematical approach and a few simulation results that varying set-up costs are provided. The method reduces set-up costs stationarily and non-stationarily to examine the effects on total costs and total holding costs.