APPENDIX ITHE EASY WAY TO CALCULATETHE COST OF DOWNTIME

Calculating the true cost of downtime is difficult because it requires knowing all the direct and indirect costs, such as labor, power, etc. The equation, below, makes it simple by focusing on lost opportunity.

  • LO = 48 (a) (b) (c)

  • COD = (LO) (d)

KEY

Assumes 48 production weeks per year.

  • LO = Lost Opportunity (number of products not produced per year due to downtime)

  • COD = Cost of Downtime (USD per year)

  • a = Changeover downtime (minutes)

  • b = Number of changeovers per week

  • c = Products produced per minute

  • d = Revenue per product

EXAMPLE

LO = (48 wks/yr) (300 min/changeover) (4 changeovers/wk) (1980 products/min) = 114,048,000 products per year not produced due to downtime

COD = (114,048,000 ...

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