Nabors Motors Division was given the charge to reduce the delivery time of its tractor mo¬

tors from 3 days to 1 day. To help achieve this goal, engineering and production workers had made the commitment to reduce setup times. Current setup times were 12 hours. Setup cost was $50 per setup hour. For the first quarter, engineering developed a new process de¬

sign that it believed would reduce the setup time from 12 hours to 8 hours. After imple¬

menting the design, the actual setup time dropped from 12 hours to 7 hours, one hour less than expected. In the second quarter, production workers suggested a new setup procedure.

Engineering gave the suggestion a positive evaluation, and they projected that the new ap¬

proach would save an additional hour of setup time. Setup labor was trained to perform new setup procedures. The actual reduction in setup time based on the suggested changes was 1.5 hours.

Required:

1. What is the kaizen setup standard that would be used at the beginning of each quarter?

2. Describe the kaizen subcycle using the two quarters of data provided by Nabors.

3. Describe the maintenance subcycle using the two quarters of data provided by Nabors.

4. How much nonvalue-added cost was eliminated by the end of two quarters?

5. How does kaizen costing differ from standard costing?