In this paper, an analysis model is formulated to resolve the economic just
ification of machine changeover time reduction in a manufacturing cell. Thi
s model examines the effects of changeover time reduction for each machine
and minimizes the total relative cost in the manufacturing cell while deman
d is variable. Adding the concept of a product's life cycle, we develop a m
athematical model to deal with variable demand in the planning horizon. The
budget constraint is also added to meet the conditions of different invest
ed amounts. Finally, an example, which is derived from differ ent set-up ti
me reduction projects, and simulated production environment is used to demo
nstrate the details of the model. The optimum investment amount on changeov
er reduction operation for each machine can be found via the proposed model
and the maximum benefits are then obtained.