Lean Manufacturing & Operations worked example

Setup Reduction Payback with total smed project investment of 37,500 $: a worked example

This scenario runs the setup reduction payback calculation on the strong side: total smed project investment of 37,500 $, with every other input held at its documented default. Use this calculator to build the business case for SMED investments by showing leadership how quickly the project pays for itself through recovered capacity.

The inputs for this scenario

  • Total SMED project investment: 37,500 $ (raised for this scenario; the documented default is 15,000)
  • Annual savings from recovered time: 48,000 $/yr (unchanged)
  • Annual ongoing cost: 2,000 $/yr (unchanged)

Working through the calculation

  • Applying the documented formula (Payback = Investment / (Annual Savings - Ongoing Costs)) to the inputs above produces each figure below.
  • At this operating point the engine returns 0.82 months for payback period (months), the number this scenario is built around.
  • At this operating point the engine returns 46,000 $ / yr for net annual benefit.
  • At this operating point the engine returns 37,500 $ for total smed investment.
  • At this operating point the engine returns 192,500 $ for five-year net benefit.

How this compares with the baseline

  • Against the tool's baseline example, where total smed project investment sits at 15,000 $ and the headline result is 0.33 months, this scenario comes in 150% above the baseline at 0.82 months.
  • Use it when seeking approval for a setup-reduction investment or comparing competing improvement projects on speed of return. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Payback period (months): 0.82 months (headline result)
  • Net annual benefit: 46,000 $ / yr
  • Total SMED investment: 37,500 $
  • Five-year net benefit: 192,500 $

Run it with your numbers

  • Every input above is editable in the live Setup Reduction Payback calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.