Expenditure can also be made on set up time reduction. This includes expenditure on analyzing set up procedures and developing and documenting new statements of procedure. It also includes expenditure on plant modifications to facilitate quick changeovers.
Investment in set up time reduction will reduce the amount of time spent setting machines up and hence increase effective capacity (provided batch size remains constant). Other factors affecting the capacity lost to setups are: batch size, number of products, and product complexity.
We assume that there is a standard setup time of about 4 hours per setup. By investing in setup time reduction we can reduce this. Over the last 5 years setup times have been reduced by 5%. With the present batch sizes and number of products, each firm is losing about 10% of theoretical factory capacity on setups.