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1 Journal of Achievements in Materials and Manufacturing Engineering

1 2008

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Determination of the financial impact of machine downtime on the post large letters sorting process

Fox J. P., Brammall J. R., Yarlagadda P. K. D. V.

Journal of Achievements in Materials and Manufacturing Engineering

2008

Vol. 31, nr 2

732-738

Purpose: The work outlined in this paper has aimed to develop the first comprehensive methodology for determining the cost of downtime, with particular application to the Australia Post's automated mail processing machines. Design/methodology/approach: Machine downtime, whether planned or unplanned, is intuitively costly to manufacturing organisations, however is often very difficult to quantify. Costing processes are rarely undertaken within manufacturing organisations. It has previously been estimated that 80% of industrial facilities were unable to accurately cost downtime, with many facilities underestimating the total cost by a factor of 200-300%. Findings: Models that did exist rarely considered more than a subset of the costs identified elsewhere, leading to overly conservative estimations. In addition, because cost definitions are not consistent, methodologies for evaluating and quantifying individual costs have not previously been adequately defined. Practical implications: It was also acknowledged that the lack of practical guides has hindered costing procedures of any nature being implemented more readily. Originality/value: The method presented may be applied to any manufacturing environment which would benefit from a more complete understanding of the magnitude of the cost of machine or process downtime.