Investment in set-up time reduction with time-varying demand

In this paper, a mathematical model is developed to investigate the economic effects of set-up time reduction. In this model, the concept of product life cycle and continuous demand are included, with the objective of minimizing the total relative cost while demand is variable over time. Also, budget constraints are added to describe the conditions of limited investment. Following the suggested procedure of deciding investment in set-up time reduction, a manager can conclude if set-up time reduction is economically feasible and allocate the investment optimally. Finally, an example about the declining market demand is provided to demonstrate the application of the model.