Setup time reduction and competitive advantage in a closed manufacturing cell

The relationship between setup time reduction and performance improvement in the stochastic closed manufacturing cell is addressed. The improved cell performance is linked with the potential competitive advantage of the firm in the marketplace. An M/G/1 queueing model of a ‘closed manufacturing cell’ (i.e., the cell produces to stock rather than to order) is formulated. Decreasing marginal improvements in cell flow time are shown to result from job setup time reductions. Additionally, marginal reductions in optimal product batch sizes and flow time variance are also shown to diminish as job setup time decreases. Suggestions are provided for allocating limited capital among heterogeneous products for setup time reduction purposes. For a given product mix, optimal allocation of setup time reduction investment is shown to be dependent on key product and production parameters.