Nabors Motors Division had been given the charge to reduce the delivery time of its tractor motors from three days to one 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 design that it believed would reduce the setup time from 12 hours to 8 hours. After implementing the design, the actual setup time dropped from 12 to 7 hours, one hour more than expected. In the second quarter, production workers suggested a new setup procedure. Engineering’s evaluation of the suggestion was positive, and it projected that the new approach 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: lop4 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?