Quick die change 2nd ed

QUICK DIE CHANGE
SECOND EDITION

David Smith

Society of
Manufacturing
Engineers
Dearborn, Michigan


Copyright © 2004 Society of Manufacturing Engineers
987654321
All rights reserved, including those of translation. This book, or parts
thereof, may not be reproduced by any means, including photocopying,
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preparation of this book, the publisher assumes no responsibility for
errors or omissions. Publication of any data in this book does not constitute a recommendation or endorsement of any patent, proprietary right,
or product that may be involved.
Library of Congress Catalog Card Number: 2004103070
International Standard Book Number: 0-87263-715-8
Additional copies may be obtained by contacting:
Society of Manufacturing Engineers
Customer Service
One SME Drive, P.O. Box 930
Dearborn, Michigan 48121
1-800-733-4763
www.sme.org
Persons who contributed to producing this book:

Robert King, Manager, SME Reference Publications
Rosemary Csizmadia, SME Production Editor
Frances Kania, SME Administrative Coordinator
Jon Newberg, Contributing Editor
Printed in the United States of America


To all people who bring their enthusiasm and knowledge
to the pressroom for advancement of the art of die setting


Preface
When asked by SME to write the first edition of Quick Die Change,
which was published in 1991, I had just finished editing the third edition of Die Design Handbook. SME was one of many engineering societies and trade associations holding seminars on the topic of quick die
change. The topic was drawing interest in trade publications, most
notably Automotive Industries (AI) magazine.
Annually in the 1980s, under the leadership of AI editor John
McElroy, an open competition was held to see who within the automotive industry could change over a line the most quickly. Books
flooded the marketplace, including English translations of Japanese
works, which claimed discovery of the quick changeover of press tools
from one part to another in less than 10 minutes. For the reader and
historians who study technology transfer, Quick Die Change, second
edition provides references to the original invention to establish the
true source of claims of die changes of under 10 minutes.
Quick Die Change, second edition builds off the success and strong
points of the first edition. It covers the tooling engineering aspects of
quick changeover as well as the human resources, fair play, and safety
issues facing those entrusted to carry out the task. In comparison to the
first edition, there are many more figures depicting the methods and
people who make quick die change a standard way of doing business.

This includes those managers who take the time to learn from the real
experts on the shop floor and provide a safe workplace and all needed
equipment and training.
Dave Smith can be contacted by e-mail:
Or, visit his website: www.smithassoc.com.

xv


Table of Contents
Preface xv
Acknowledgments xvii
Chapter 1 Introduction

1

History of Quick Die Change 1
Why We Failed 3
How Quick Die Change Works 4
Keep Training Simple 5
Quick Die Change in a World Economy 5

Chapter 2 Relationship of QDC to Economic Order
Quantity and Just-in-Time 7
Pitfalls of Excessive Run-ahead 7
Working Toward an Economic Order Quantity of One 8
The Economic Order Quantity Model 10
Reducing the EOQ 14
The Impact on Just-in-Time 14
Economic Order Quantity Analysis 17

Chapter 3 Training, Acceptance, Involvement,
and Support 19
The Survival Instinct 19
Training in Proper Procedures is Essential 20
Effective Employee Involvement 23
Respected Experts can be Valuable 24
Meeting Room Requirements 24
Training Materials and Instruction 27
Strategy for Scheduling Training 28
Union Involvement 29
Production Management Acceptance 30
Killing Two Birds with One Stone 30
Have Students Develop Their Own Work Rules 31
Support is Needed 33
Support Activities and Responsibilities 33
ix


x Quick Die Change

Chapter 4 Basic Good Die Setting Practices
Die Setters 47
The Die Setter Helps the Operator
Avoid Shortcuts 48
Good Practices 48
Improving Die Alignment 59
Die Locating Methods 61

47

48

Chapter 5 Die Clamping Methods 65
Examples of Poor Practices 66
Mechanical Die Fastening 75
Threaded Fastener Styles 82
Die Setting Wrenches 84
Standardized Clamping Height 84
Fastening Methods 86
Power-actuated Die Clamps 106
Powered Systems versus Manual Bolting 121

Chapter 6 Die Parallels and Die Locating Methods 125
Die Parallels 125
Die Location 142

Chapter 7 Quick Die Change Strategy 167
Importance of Quick Die Change 167
Automotive Supplier Case Study 168

Chapter 8 Grouping Presses and Dies for Quick Die Change 173
Evaluating Presses and Dies for Grouping 173
Dealing with a Mix of Equipment 174
Every Shop Needs a Plan 175
Common Press Factors 177
Using Existing Records 181
Critical Factors for Running Jobs in the Home Press 182

Chapter 9 Setting Progressive Dies Quickly and Accurately 183

Work Assignments Vary from Shop to Shop 184
Providing Feedback to the Die Repair Activity 184


Table of Contents

xi

Setting Progressive Dies 185
Starting Strips in Progressive Dies 194
Chutes and Conveyors 195
Camber Compensation 199
Designing Dies that Tolerate Cambered Stock 200
Plan a Good Starting Sequence 204
Lubrication 205
Cam Limit Switches 206
Die Protection Systems 206
Planning Sequence of Operations 208
Inductive Proximity Sensors 210
Photoelectric Sensors 213

Chapter 10 Setup of Tandem Line Dies 217
Care in Setting Draw and Stretch Form Dies 217
Bottoming Draw Dies in a Single-action Press 217
Single-action Inverted Draw Die with a Nitrogen Manifold 218
Systematic Procedures for Setting Single-action Draw Dies 220
Making Important Setup Information Available Directly
on the Die 230
Slide Adjustment Mechanism and Hydraulic Overload 235
Making the Final Adjustment to Bottom the Die 236

Setting and Adjusting Double-action Press Draw Dies 236

Chapter 11 Operating Dies at a Common Shut Height 237
Definition of Shut Height 237
Common Pass Height Adds Advantages 238
Avoiding Damage During Conventional Die Setup 238
Shut Height Readout and Auto Adjustment 239
A Dangerous Assumption 240
How a Press Develops Tonnage 241
Deflection or Compression in Solid Steel 242
Applying the Law of the Spring to Presses 244
Example of How Slide Adjustment Increases Tonnage 245
Cutting Dies are an Exception 245
Die Shut Height May Vary with Tonnage Requirements 246
Measuring Press Deflection with Load Cells 247
Why Die Shut Height May Need Compensation 249
Retrofitting Example . . . What Can Go Wrong? 250


xii Quick Die Change
Common Press Shut Height Adjustment Procedure 254
Sources of Press Error 258
Common Die Shut Height Adjustment Procedure 261
Maintaining a Common Shut Height 262
Procedure for Transfer Presses 262
Exchanging Dies Between Presses at a Common Shut Height 266
Important Points to Remember 267

Chapter 12 Decoiling, Straightening, and Feeding
Coil Stock 269

Example of Coil Feeding Auxiliary Equipment 269
Decoiling Systems 271
Quick Coil Change 272
Stock Straighteners 277
Crop Shears 279
Computer Integration of Pressworking Processes is Not
Always Easy 280
Roll Straighteners are Not Always Necessary 281
Cases Where Coil Set May Not be a Problem 282
Determining the Bend Radius to Produce Coil Set 283
Quick Die Change and Quality Considerations 284
When Stock Curvature is Necessary 284

Chapter 13 Transfer Press and Die Operations 285
Typical Transfer Press Features 285
Examples of Transfer Press Operations 289
Multiple Slide Straightside Presses 292
Automatic Transfer Press Die Change at Auto Alliance 295
Employee Training 301
Die Design for Transfer Presses 302
CAD Design Considerations 302
Ford Woodhaven Stamping Plant Transfer Die Change 303
Problems Installing Transfer Presses in Old Plant Layouts 305
Safety When Inching the Press 306

Chapter 14 Basic Principles of Press Force Monitors 311
Force Monitoring 311
Measuring Press Strain to Determine Force

315

Table of Contents

Poor Sensor Mounting 318
Gap-frame Press Sensor Locations 325
Gaging Underdriven Presses 326

Chapter 15 An Overview of Press Safeguarding 329
Company Standards 329
Historic Pre-OSHA Overview of Edward Crane 330
The Engineer’s Historic Duty in Safe Operations 330
Working in Presses and on Automation Safety 331
Avoiding Operator Injury 339
Power Press Law, Training, and Shop Rules 355
Presence Sensing Device Initiation (PSDI) 355

Chapter 16 Press Counterbalance Adjustment
and Maintenance 357
Correct Air Counterbalance Pressure 357
Spring Counterbalances 357
Air Counterbalance Safe Construction Features 358
Air Counterbalance Function 359
Counterbalance System Components 360
Setting Correct Counterbalance Pressure 364
Common Errors in Counterbalance Adjustment 365
Automatic Pressure Adjustment 365
Establishing Correct Counterbalance Settings 366
Counterbalance Maintenance 368

Chapter 17 Ergonomics in the Pressroom 371
Carpal Tunnel Syndrome 371
Back Injuries 372
Implement Ergonomic Improvements
Lifestyle Off the Job 374

374

Chapter 18 Dealing with the Unthinkable 377
Training and Preparedness 378
Raising the Ram 379
Regular Emergency Drills 381
Entrapment Occurrence 381
The Goal 382

xiii


xiv Quick Die Change

Chapter 19 Unsticking Presses Stuck on Bottom
Dead Center 383
Action Plan if the Press Sticks on Bottom 383
Dealing with Stuck C-frame Presses 385
Unsticking Straightside Presses 385
Press Tie-rod Pre-stressing Theory and Procedures 386
Assembling Straightside Presses that have Tie Rods 397
Benefits of Proper Tie-rod Pre-stressing 398
Action to Take in the Event of a Large Overload 398
Example of a Broken Tie-rod Failure 401

Conclusion 403

Chapter 20 Die Maintenance Documentation
and Tracking 405
Die Maintenance Team 405
Systematic Die Maintenance System 405
The Request for Maintenance Form 412
Case Study 413
Continuous Improvement 415

Index 417


1
Introduction
The second edition of this work follows the pattern of the first—it
is an account of human progress, not any one person’s biography. The
history of quick changeover remains unchanged.

HISTORY OF QUICK DIE CHANGE
History, the record of human progress teaches that credit for
authorship of important concepts is often clouded and uncertain. One
of the best places to settle questions about the invention origin is at the
patent office.
The acronym QDC, short for quick die change, is a registered
trademark of Danly Machine of Chicago. Application for this trademark was made on June 29, 1961 and granted October 23, 1962. Patent
application for the Danly QDC system was made by inventor Vasil
Georgeff on August 16, 1956 and granted in 1961. This system featured
dual moving bolsters that permitted exchanges of large stamping dies
in seven to eight minutes (Schafer 1992).

The system was sold to the automakers during the American expansion following World War II and then abroad where the principal
users were the Japanese automakers such as Prince motors, Fuji
motors and especially Toyota (Votava 1992).
Figure 1-1 illustrates a six-press tandem dual moving bolster line
in the Danly Chicago erection floor (photographed in 1959). Toyota
crews from Japan were trained there in 1959 to achieve die sets in less
than 10 minutes as a condition of the buy-off. This was a decade before
Shigeo Shingo’s rediscovery of die change in under 10 minutes by
using dual moving bolsters. The term “single minute exchange of
dies” (SMED) may have been a way of avoiding infringement of the
Danly QDC trademark, which Danly defended vigorously.

1


2 Quick Die Change

Figure 1-1. Six-press dual moving bolster tandem line shown on the Danly Chicago
erection floor.

The Great Lakes Basin of North America was a natural location for
the development of QDC. Chicago is the home of both the telephone
and the coin machine industry. The production volume of electromechanical relay parts demanded that a number of dies producing the
same part be in operation simultaneously. To change them quickly,
they were made and maintained at identical dimensions.
The next logical step was to build different dies to the same standard dimensions to facilitate quickly changing dies. Exchanging dies
by automatic means and producing a different product in less than 10
minutes was the following step.
Over 40 years ago, the Western Electric Company with its boltless
system of automatically exchanged dies, could change over in less

than a minute. These dies punched the holes in standard relay rack


Introduction

3

panels. Almost endless varieties of panel configurations were produced from a few standardized blank channels. Today, this as an automated work cell for flexible manufacturing.
The Western Electric Companies (Chicago) Hawthorne Works is
gone. It was replaced by a shopping mall. What remains is one of the
best organized systems of manufacturing standards in the world:
A pioneering computerized preventive maintenance system, a legacy
of systematic industrial motion picture time and motion studies
and the basis for the Science of Human Relations—The Hawthorne
Experiment.
This short history of QDC is reproduced exactly as it appears in
the introduction to the first edition of this book in 1991. Several book
reviewers expressed surprise at the historic timeline. It was widely
assumed that Shigeo Shingo’s single minute exchange of dies (SMED)
concept using dual moving bolster and pre-staging of dies was the
invention of QDC. In all fairness, Shingo was a good engineer working under difficult circumstances. However, dual moving bolster
QDC presses were sold to the Japanese automotive manufacturers a
decade before Shingo determined that preparatory or pre-staging
work was intended to be external to the die set. Training is essential—
the Japanese Toyota QDC team was trained at Danly. They achieved
seven-minute die sets in the Danly Chicago Works as a part of the 1959
press buy-off (Smith 1992).

WHY WE FAILED
Starting in the late 1950s, Danly and USI-Clearing made presses

equipped with moving bolsters, standard locating pins, and automatic
die clamps that were installed in some American and Japanese automotive stamping plants. In many plants, the automatic clamps were
soon removed and replaced with manual bolts. This was due to a lack
of communication and teamwork. For example, the die room could
fail to get the locating pin pockets in the correct location—a serious
miscommunication and lack of teamwork. Accurate locations are
required so the clamps would line up with the clamping slots in the
upper die. When the bolster failed to move, the cause was seldom
found and corrected. Instead, a forklift truck was used to batter it into
position. To remove the die from the press, die cushion pins were
inserted into the tapped holes in the bolster that were intended for


4 Quick Die Change
handling hooks. The bridge crane chain slings then jerked the die and
bolster out of the press. This practice resulted in the threaded holes
being ruined as well as serious accidents.
The Japanese likewise failed to get their dual moving bolster
equipment to work as intended. Perhaps some day research in the history of technology will document what appears to be a three-way
transfer of technology between the United States, Japan, and Germany
that took decades and had to be rediscovered repeatedly by Shingo
and others. To help any undertaking of this research, information on
the history of fast changeover and the transfer of this technology is
included in this edition.

HOW QUICK DIE CHANGE WORKS
Quick die change is something you do and not necessarily something you buy. It involves working smarter, not harder. The entire
plant culture embodies the concept of continuous improvement to
make quick changeover work. Continuous improvement has its roots
in the Western doctrine of progress. Achieving a good plant culture is

much easier to establish in a new plant than at an existing plant with
ingrained bad habits and attitudes. Tangible benefits must be given to
the associates or hourly employees.
Don’t expect cooperation through coercion. If it is obvious that
management is using the employees goodwill for their own benefit
without providing acceptable wage levels, benefits, and fair accountability for any profit sharing, discontent and high turnover of the best
employees ensues.
Tapping workers’ latent genius to simplify and rationalize their
workplace is essential. Time for regular team meetings with management to find and carry out safer, more rapid die changeovers and efficient production is well worth the effort. Expenditures that often have
a rapid payback are easily identified in team meetings where the
leader speaks last. Some items are low-cost such as better fasteners,
positive locating systems, and organized die storage near the point of
use. Other changes can be costly, but still pay back. Dedicated die
changeover carts and die openers and flippers are costly, but ideal for
handling some heavy dies quickly and safely. Avoiding die and press
damage can provide a payback plus safety and time savings.
Cooperation and training is the key. Striving to attain high
throughput with minimum changeover time also entails striving for


Introduction

5

minimum scrap. Anything that does not add value to the product and
enterprise is defined as waste. Waste is often eliminated by simplifying processes and improvements in the plant layout. This doctrine is
the cornerstone of Henry Ford’s lesson to the world.

KEEP TRAINING SIMPLE
Engineers know that statistical process control (SPC) is an industrial application of Poisson’s Distribution. Likewise the behavior of a

progressive die with a pitch growth problem or transfer press deflection that requires die shut height compensation are rooted in Young’s
Modulus of Elasticity and Poisson’s Ratio.
Employees and associates should know the basics of SPC and how
to find the root cause of process variability. A continuous improvement coordinator can be essential to ensure that progress does not
stall. The coordinator must work with the teams on the floor to correct
problems through better processes and foolproofing designs to avoid
incorrect assembly. Often just letting the workforce understand the
root causes of variability gets progress underway. Showing faith in
their abilities and giving help as needed, employees usually arrive at
the best solution.

QUICK DIE CHANGE IN A WORLD ECONOMY
Free trade in today’s world economy requires automating many
jobs done in various countries simply to minimize variability. A friend
of the author—Susheel Choubal in India—is employed in the electrical industry and has experience with precision stamping processes.
He holds a degree in mechanical engineering and has several patents
assigned to his employer. To advance precision stamping and automation in India he has published many Indian technical publications. In
his work as a tooling and automation engineer, he obtained a copy of
the first edition of Quick Die Change. His interest in the book was
sparked because it has examples of press deflection formulas and
spreadsheet entry instructions for making calculations.
Susheel is an expert who designs automation for what would otherwise be manual processes. Working by hand, no matter how low the
cost, leads to product variability. Processes are automated at a considerable cost anywhere in the world just to make uniform products. QDC
and quick changeover is even more essential in a world economy.


6 Quick Die Change
Ford staff engineers, such as the author’s friend Jerry Nine, have
devoted much of their career to supporting good process control and
QDC in large stamping plants that are highly resistant to cultural

change. The Japanese revere Henry Ford as the person who invented
modern manufacturing and saw anything that did not contribute to
making product as waste. The manufacturing insight of Ford is based
on common sense. Ford does not need to remain in the stamping business, but most automakers make money doing their own stamping—
stamping is a profit center. To prosper in a world economy, the Ford
Motor Company must follow the precepts of the founder.
This book is dedicated to all of the people who enthusiastically
seek better ways of manufacturing including fast changeover from
one part to another, thus making efficient use of machinery. Special
thanks are due my wife Marlyn who helped with the final proofreading of the book as well as Jerry Nine, Susheel Choubal, Jim Barrett,
Dan Falcone, Bob King, Rosemary Csizmadia, Frances Kania, Cheryl
Zupan and the reference publications staff at the Society of Manufacturing Engineers (SME).

REFERENCES
Smith, David. 1991. Quick Die Change. Dearborn, MI: Society of Manufacturing Engineers.
Smith, David. 1992. Quick Die Change Video Training Series, Tape 1. Interview
with Tom Schafer and Ron Votava at Danly Machine in Chicago, IL. Monroe, MI: Smith & Associates.


2
Relationship of QDC to Economic
Order Quantity and Just-in-Time
PITFALLS OF EXCESSIVE RUN-AHEAD
Simple logic says it would be wise to plan to run enough good
parts to satisfy production or shipping requirements for long into the
future. This plan would be true particularly when an extremely difficult setup followed by trial-and-error adjustments is involved. There
are, however, many good reasons why this is unwise.
A better plan is to reduce the difficulty of the setup by adopting
quick die change (QDC) techniques and hardware. This also greatly
reduces the trial-and-error adjustments. Setup repeatability problems

that are not corrected by QDC techniques (such as stock variation and
tool engineering problems) must also be addressed.
There must never be an assumption that economic order quantity
(EOQ) based on setup cost should determine the frequency and
amount of production. Every cost-effective means must be applied to
reduce setup cost.

Planning Amount and Frequency of Production
Many factors influence the exact amount of production. For example, there is a cost associated with rebanding partial coils of stock and
returning them to inventory. For this reason, the savings realized by
running integral numbers of coils should be factored into the decisionmaking process on the amount of production to run. Economy of coil
sizes is also a factor. Large coils are often less costly on a per pound
basis and produce more parts per coil change.
Integrated automotive stamping and assembly plants stamp the
larger body panels such as quarter panels, fenders, roof, and floor pans
on site. Here, it is assumed that QDC technology such as dual moving
bolsters is being used and changeover occurs in under 10 minutes. The
7


8 Quick Die Change
rectangular and trapezoidal blanks may be sheared and a pre-lube
applied at the stamping operation. Complicated blanks such as twoout-per-hit fenders and quarter panels require more setup time. The
same is true of tailor-welded composite blanks requiring highly specialized blanking and laser welding operations. In either case, supplying the correct number of blanks to the line to meet a shift, day, or twoday production need is typical. Rebanding and returning blanks to
storage is wasteful. EOQ does not drive the process. The assembly line
determines the demand by a pull or scheduled batch system.
Customer relationships have a big influence on the production frequency. Some customers insist on a certain number of days of inventory being held as a safety stock. Local customs, holidays, and traditions must be taken into consideration. For example, the Michigan
deer hunting season has serious implications for car part production.
The number of hunters in the field may exceed the number of soldiers
that make up the United States’ standing army. There are only two

solutions: run production ahead a week starting in October or shut
down for the first week of deer hunting season.

WORKING TOWARD AN ECONOMIC ORDER
QUANTITY OF ONE
Much has been written about just-in-time (JIT) in the past few
years. The purpose of JIT is to deliver parts to a production line just in
time and to keep the line running without a bank of parts as a “safety
stock.” Without some other considerations, a crisis is built in at the end
of every batch. The production line needs the necessary parts to keep
running. If there were any glitches in the delivery of parts to the line,
it may be necessary to either shut the line down, or spend an inordinate amount of money to get the parts to the line.

What is Economic Order Quantity?
Economic order quantity is the quantity of parts, either purchased
or manufactured, which results in the lowest part cost while considering for a purchased part:
1. The purchase price,
2. The cost for issuing and processing a purchase order, and
3. The cost for holding the part in stock if all of the order is not
used immediately.


Relationship of QDC to Economic Order Quantity and Just-in-Time

9

For a manufactured part, the considerations are:
1. The cost to manufacture the part,
2. The cost for setup of the equipment, and
3. The cost for holding the part in stock if all of the parts are not

used immediately.

Factors that Influence Economic Order Quantity
To determine the EOQ, the part and setup cost, manufacturing rate,
annual demand for the part, and the cost for holding the part in stock
on an annual basis must be known. Some advocates of QDC in automotive body production believe that EOQ is no longer a factor if die
change occurs quickly. However, the in-plant blanking department,
the outside blanking houses, and the entire supply chain supporting the press line is faced with the grim science of economics defined in
EOQ.
Manufactured part cost consists of the material cost, labor per
part, rent or amortization of the space used to manufacture the part,
equipment and tool amortization, scrap from damage while storing or
while in storage, scrap from obsolescence, loss of parts while in storage, fixed burden, variable burden, and freight costs involved. If one
part is produced and used immediately (and not considered in the cost
for changeover), the cost is that of the part. However, if any quantity
of parts requires keeping some of them in stock for any time, there is
an associated cost of keeping the part. The cost for keeping the part
is not just interest paid on the money tied up in the parts stored. It
includes warehouse rent or amortization, damage from handling the
parts to and from storage, loss of parts while in storage from lack of an
information system, obsolescence, warehouse equipment such as fork
trucks, racks, and bins, the cost of labor to put the parts in storage and
to remove them, labor to maintain the inventory of the parts in stock,
and insurance on the parts while in storage. Therefore, the cost for
keeping a part in inventory for a year depends on a number of factors.
The cost for small high-value parts unlikely to become obsolete relates
mainly to the cost of money and inventory control costs. Large stampings—such as replacement or service automotive panels—are costly to
store and very likely to become obsolete. The annual cost of holding a
part in inventory consists of many factors and varies from a small

10 Quick Die Change
amount over the cost of money to a large percentage of the part’s value
when sold.
Add to the part’s cost the cost for equipment changeover, or the
cost for issuing and processing a purchase order. If there is only one
part involved, the cost of that part is the total of the part cost plus
the cost for changeover. If more than one part is made on a setup, the
cost of that setup can be amortized over the quantity of manufactured
parts. The total cost of the part then depends on the total of the part
cost, the amortized cost of the setup, and the amount put in the
part for storage until its use. The American Production and Inventory
Control Society is the professional association for those who work in
or study inventory control.

THE ECONOMIC ORDER QUANTITY MODEL
The EOQ model identifies the order size that will minimize the
sum of the annual costs of holding and ordering inventory. This model
assumes that:
1. There is one product involved.
2. Annual usage (demand) requirements are known.
3. Usage is spread evenly throughout the year so that the usage
rate is reasonably constant.
4. Lead time does not vary.
5. Each order is received in a single delivery.
6. There are no quantity discounts.

Determining Economic Order Quantity
Figure 2-1 illustrates how the costs of carrying parts in inventory
are linearly related to order size. The equation is:

Annual Carrying Cost ϭ

Q
H
2

Q = Order quantity in units.
H = Carrying cost in dollars per unit per year.
Example:
Let Q = 4,500 units.
H = $.27 per unit per year carrying cost.

(2-1)


Relationship of QDC to Economic Order Quantity and Just-in-Time

11

Q
4,500
H or
ϫ $.27 ϭ 2,250 ϫ $.27 ϭ $607.50
2
2

Carrying costs are therefore a linear function of Q, and increase or
decrease in direct proportion to the order quantity Q, as illustrated in
Figure 2-1.
Figure 2-2 illustrates how ordering costs are both inversely and

non-linearly related to order size. The slope of the curve becomes flatter as the order size increases because the fixed setup cost is spread
over an ever-greater number of units. The slope of the curve is
described by:
Annual Setup Cost ϭ

D
S
Q

(2-2)

S = Setup cost.
Q = Order quantity in units.
D = Demand in units per year.

COST
TO
KEEP
$/PART

1,000

2,000

3,000

4,000

5,000

Figure 2-1. Shown is the linear relationship of the cost of carrying parts in inventory to order size.


12 Quick Die Change

ORDERING COST SPREAD OVER
MANY PARTS

Figure 2-2. Ordering costs are both inversely and non-linearly related to order
size.

Example:
Let D = 87,000 demand in units per year.
Q = 4,500 order quantity units.
S = $275 in setup costs.
87,000
D
S or
ϫ 275 ϭ 19.3 ϫ 275 ϭ $5,307.50 for annual setup cost.
Q
4,500

The total annual cost of carrying a part in inventory is given by:
Total annual carrying cost for one part ϭ

Q
D
Hϩ S
2
Q

Q = Order quantity in units.
H = Carrying costs in dollars per unit per year.
S = Setup cost.

(2-3)


Relationship of QDC to Economic Order Quantity and Just-in-Time

13

The total annual carrying cost for one part is equal to the annual
carrying cost plus the annual ordering cost.
Figure 2-3 illustrates the U-shaped curve that describes how the
total cost of setup and storage varies as a function of the number of
pieces produced. The U-shaped curve reaches its minimum value at
the quantity where the setup and carrying costs are equal.
An expression for the optimal order quantity Qo can be obtained
with calculus. The result is the equation:
Optimum Order Quanity ϭ Qo ϭ

2DS
A H

(2-4)

D = Demand in units per year.
S = Setup cost.
H = Carrying costs in dollars per unit per year.

COST
TO
KEEP
$/PART

1,000

2,000

3,000

4,000

5,000

Figure 2-3. The U-shaped curve describes how the total cost of setup and storage
varies as a function of the number of pieces produced.


14 Quick Die Change
Example:
D = 87,000 demand units per year.
S = $275 in setup costs.
H = $.27 per unit per year carrying cost.

2 187,000 ϫ 2752
2DS
4.785 ϫ 107
ϭ

ϭ
B H
B
$.27
B
$.27
ϭ 21.7722 ϫ 108 ϭ 13,312 units ϭ optimum order quantity.

The low point of the total part cost line is the EOQ, the quantity
that results in the lowest per part cost. If the company buys or builds
more or less than the EOQ, then more will be paid for each of the parts.

REDUCING THE EOQ
There are only two ways to reduce the EOQ. Either the cost of storage or the cost of setup must be reduced.
There are not many opportunities for reducing the costs associated
with holding parts in inventory. Little can be done to reduce the cost
of building space, money, or the likelihood of part obsolescence.
Figure 2-4 illustrates how the EOQ curve changes as setup costs
are reduced. If all setup costs are eliminated, the EOQ becomes one. It
is possible to reconfigure a die during the upstroke of a press to produce a different part. This is accomplished by the use of pneumatic or
hydraulic cylinders to engage or disengage punches and/or sub-dies.
This process is known as gagging a punch or sub die and the term
“gaggable tooling” is applied to this process (Smith 1992).

THE IMPACT ON JUST-IN-TIME
Before JIT, safety stock was kept for insurance against running out
at the end of every batch. It was expensive insurance, and led to a certain amount of complacency in manufacturing operations. As problems surfaced, a tendency arose to increase the safety stock, rather
than cure the delivery problem. This increased average inventory, risk

Relationship of QDC to Economic Order Quantity and Just-in-Time

15

Figure 2-4. The EOQ curve changes as setup costs are reduced.

of damage, loss, obsolescence, and other costs caused by high inventories. A “Never-Lie” inventory control system shows that the safety
stock level will be reached at a specific time.
When the order point is reached, “Never-Lie” triggers an order for
either the manufacture of the parts in the shop, or the delivery of parts
from a vendor. This assumes that EOQ is checked on a periodic basis,
and the reorder point and safety stock is modified if necessary. Under
normal conditions, a new lot is manufactured. Normal conditions are
having the raw material, the tools in operating condition, and the personnel available to make the parts. Remember, this is before JIT.
If reordering isn’t done on time, or if any items (raw material,
tools, personnel, etc.) are not available, there is safety stock to protect
against catastrophe on the production line. Production would receive
the parts later, having maintained operations with the safety stock,
and rebuild the safety stock when the next order arrives on time. The
same usage pattern is true with a manufactured part.
The average inventory of a purchased part before JIT was the
safety stock plus half of the EOQ. Keep in mind that enough ware-