Decision making and forecasting with respect to risk: A simulation study for a setup-problem

In this paper, the impact of timing a setup operation on the work-in-process and cycle time is investigated. Using a small example of an reentrant production system, it is shown that there is a tradeoff between reducing the average work-in-process inventory and guaranteeing a smooth operation of the system. Furthermore it is shown, that an early setup may lead to an increased variance of the cycle time, but regarding the number of lots with an extreme excess of cycle time the timing decision has only a minor influence.