An analysis of setup cost reduction in a two stage system

This paper investigates the impact of investing in setup cost reduction in a two stage manufacturing process. Closed form relationships are developed for the cases of investment in primary stage setup cost reduction, investment in finishing stage setup cost reduction, and simultaneous investment in setup cost reduction in both stages. Numerical results are presented which compare each of the models to the basic model. These results indicate that when investment in both stages is feasible, it is most effective to simultaneously invest in setup cost reduction. Failing this, the next best alternative is to invest in setup cost reduction in the finishing stage.