Campaign Scheduling and Setup Reduction at Halden Components
Halden Components injection-moulds two parts on the same press. Part X demand is 1,200 units per week; Part Y is 800 units per week. The press runs five days, two shifts, with 7.5 productive hours per shift. Each unit requires 1.8 press-minutes, and scrap is 2%. Changeover between parts takes 4.5 hours. The current schedule runs X for two weeks, then Y for one week. Finished-goods holding cost is 18% per year; unit cost is $6 for X and $9 for Y. Customer lead time is three days, and the plant holds 9 days of X and 3 days of Y. OTIF is 94%, with late orders concentrated at the end of each campaign. A setup-reduction project could cut changeover to 90 minutes for $75,000.
1. Calculate the weekly press hours required under the current schedule, including scrap and changeovers. What is utilization, and can the press absorb a 10% demand increase without overtime?
Read the worked answer
Gross demand for good units = (1,200 + 800) / 0.98 = 2,041 units per week.
Run time = 2,041 x 1.8 minutes = 3,674 minutes = 61.2 hours.
Changeovers: the cycle is two weeks of X plus one week of Y, so there are two changeovers per three-week cycle. 2 x 4.5 = 9 hours per three weeks = 3.0 hours per week.
Total required = 61.2 + 3.0 = 64.2 hours per week.
Available = 5 days x 2 shifts x 7.5 hours = 75 hours per week.
Utilization = 64.2 / 75 = 85.6%. Spare capacity is 10.8 hours.
A 10% demand increase adds about 6.1 hours of run time plus no extra changeover time under the current campaign pattern, giving 70.3 hours and 93.7% utilization. The press can absorb it arithmetically, but 93.7% leaves almost no buffer for breakdowns, quality holds, or schedule recovery. Any unplanned downtime will create overtime or late orders. The answer is yes on paper, no if Halden wants reliable three-day lead time.
2. Calculate average cycle stock for Part X under the current schedule and under weekly alternation. Estimate annual holding-cost savings. Is the $75,000 project justified on inventory savings alone?
Read the worked answer
Current X campaign: X is produced for two weeks, so the lot is about 2 x 1,200 = 2,400 units. Average cycle stock = lot / 2 = 1,200 units.
Under weekly alternation, X is produced once per week in a lot of about 1,200 units. Average cycle stock = 600 units.
Reduction = 600 units of X. Holding cost saving = 600 x $6 x 18% = $648 per year.
Part Y is already produced in a one-week campaign, so its average cycle stock is about 800 / 2 = 400 units under either pattern, unless lot sizes change. Y saving is therefore near zero on cycle stock alone.
Total identifiable cycle-stock saving is roughly $650 per year. Even adding a modest safety-stock reduction from shorter replenishment cycles, the $75,000 project cannot be justified on holding-cost savings alone; the payback would be over 100 years. The project must be justified by capacity recovery, overtime avoidance, lead-time reduction, or service improvement, not by inventory carrying cost.
3. Recommend a production plan. Explain how setup reduction, campaign length, and the 10% growth scenario fit together, and what service metric should be tracked.
Read the worked answer
Recommendation: approve the setup-reduction project only as an enabler, and move to weekly alternation once changeover is at 90 minutes. Do not justify it on holding cost.
Current changeover load is 3.0 hours per week. At 90 minutes, two changeovers per three-week cycle fall to 3 hours per three weeks, or 1.0 hour per week. That frees about 2 hours per week and gives the flexibility to run X and Y weekly. Weekly lots cut X cycle stock from about 1,200 to 600 units and reduce the nine-day X inventory toward the three-day target.
Under 10% growth, run time rises to about 67.3 hours, plus 1.0 hour of changeover after the project, or 68.3 hours. Utilization is about 91%, still high but with more recovery room than the current 93.7%. The freed setup time and shorter campaigns reduce the end-of-campaign late-order pattern that is driving the 94% OTIF.
Track OTIF by due date and by product, plus schedule attainment and changeover adherence. If OTIF does not improve after two quarters, the constraint is not campaign length but material availability or staffing.