Minimization of Total Variable Cost through Determination of Batch Transfer Size at m Serial CNC-Machining Centers

Abstract

Background: In a batch production series consisting of several process stages for discrete products, the determination of the transfer batch size greatly affects the batch waiting time. For production using a Computer Numerical Control (CNC)-machining center, several process stages can be carried out on one machine with quick setup. The use of a single machine for all stages of the process certainly does not require transfer to the next machine. Thus, there are no material handling costs. However, the use of a single machine will result in longer batch waiting times as the production batch size increases. An increase in the batch waiting time will result in an increase in work-in-process (WIP) inventory cost. This research was conducted to reduce the total variable cost consisting of WIP inventory cost and material handling cost. Methods: This research was conducted in two steps. The first step is to divide the process stages, I into m serial CNC machining centers, where in this study I=m. The second step is to determine the same size of transfer batch, Qij for a certain number of transfers, J that produces the minimum total variable cost. Results: The results showed that J=5 resulted in a total variable cost of Rp. 146,800.00, while J=10 resulted in a total variable cost of Rp. 178,900.00. Conclusion: In conclusion, the total variable cost decreases if the size of transfer batch is reduced to a certain amount and will increase again along with the reduction in the size of transfer batch.