Factory X is trying to use level use scheduling. If their first target were to cut the current lot size in half, by what proportion must setup cost change?
A) Setup cost must be cut to one fourth its current value.
B) Setup cost must also be cut in half from its current value.
C) Setup cost must double from its current value.
D) cannot be determined
E) none of the above

Question

Quizplus · Accepted Answer

In level use scheduling, reducing the lot size typically requires an increase in the frequency of setups, which can lead to higher setup costs unless those costs are reduced. Cutting the lot size in half would necessitate a significant reduction in setup costs to maintain or improve efficiency. Reducing setup costs to one fourth would help offset the increased frequency of setups due to the smaller lot sizes, making it a strategic move to support level use scheduling.

Factory X Is Trying to Use Level Use Scheduling