• In deciding how many branded models/styles to include in your company’s product line, you need to be
alert to the costs associated with changing the production line from making one model/style to another.
The equipment on the company’s production line allows making only one model at a time, though it is
easy to produce different sizes of the same model simultaneously. To switch production over from one
model to another takes anywhere from 2 to 5 hours of set-up time, depending on styling/features of the
various models/styles, and usually is done between each day’s work shifts. Production run set-up
costs per plant for branded footwear are $1 million for 50 models, $2.5 million for 100 models, $4
million for 150 models, $6.0 million for 200 models, $8 million for 250 models, $10.5 million for 350
models, and $14 million for 500 models. The size of the plant does not matter in determining
production run set-up costs, only the number of models produced at the plant. Both the North
American and Asian plants produced 200 models/styles of athletic footwear in Year 10.