Limited investment budget analysis in multi-item production facilities

This paper analyses the relationship between production setup costs and the investment necessary to reduce these costs when different products are being manufactured on various production lines. Based on the assumption that the investment function is logarithmic, and assuming that the budget is below the optimum, calculations are made as to how to distribute this budget among given products so as to achieve a reduction in their setup costs, and determine which product contributes more to annual savings after investment. Numerical examples are provided to illustrate the analytical development of the problem, which is then applied to a specific factory.