Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time by 1 hour. Setup labour is £20 per hour. If the company wants to reduce nonvalue-added costs by 40 percent next year, the currently attainable standard for setup time would be
A) 7.6 hours.
B) 7.2 hours.
C) 6.6 hours.
D) 4.8 hours.

Question

Quizplus · Accepted Answer

Setup time reduction = 12 hours - 1 hour = 11 hoursPercentage reduction = (11 / 12) * 100 = 91.67%To reduce nonvalue-added costs by 40%, the setup time reduction should be 40% of 91.67% = 36.67%Therefore, the currently attainable standard for setup time would be 12 hours - (36.67% of 12 hours) = 7.6 hours.

Setup Time for a Product Is 12 Hours