This paper builds on a recent empirical study of the setup‐reduction process that suggests setup‐reduction proceeds through three major stages and that each stage is dominated by a particular type of investment function. Specifically, it examines the question of how to best prioritize investments during the stage that emphasizes standardizing setups across a work center.
We compare different investment‐allocation rules in a multi‐item, capacity‐constrained, dynamic demand environment under a variety of cost, demand, and investment assumptions. This analysis shows that significant differences in benefits can be achieved depending on the way setup‐reduction investments are prioritized.
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