When a manufacturer faces growing inventory levels and dropping service levels, the primary goal is to optimize the supply chain to be more responsive and efficient. Reducing setup time is a key strategy in this context because:
* Setup Time Reduction: By reducing the time required to changeover or setup equipment for different production runs, manufacturers can produce smaller batches more frequently. This leads to:
* Lower inventory levels because production is more closely aligned with actual demand.
* Improved flexibility and responsiveness to customer orders, which enhances service levels.
* Lean Manufacturing Principles: This approach is consistent with lean manufacturing principles, which focus on reducing waste and increasing efficiency. By minimizing setup times, manufacturers can reduce work-in-progress inventory and finished goods inventory.
* Enhanced Agility: Reducing setup time makes the manufacturing process more agile, allowing it to quickly adapt to changes in demand and reduce the likelihood of stockouts or overproduction.
* Continuous Improvement: This strategy fosters a culture of continuous improvement and can lead to further efficiencies and cost reductions over time.
Increasing safety stock (Option A) might temporarily address service levels but will increase inventory costs.
Optimizing the total cost (Option C) is a broad strategy and not specific enough. Implementing batch operations (Option D) might not directly address the issue of service levels and could increase inventory if not carefully managed.
References
* "Lean Thinking: Banish Waste and Create Wealth in Your Corporation" by James P. Womack and Daniel T. Jones.
* "The Lean Six Sigma Pocket Toolbook" by Michael L. George, John Maxey, David Rowlands, and Mark Price.