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Practice Problem: Chapter 16, Just-in-Time Systems Problem 1: Bryant Electronics produces short runs of battery-powered pocket lanterns.

You have been asked to reduce inventory by introducing a kanban system. After several hours of analysis you have developed the following data for connectors used in one work cell. How many kanbans do you need for this connector? Daily demand 1,500 units Production lead-time 1 day Safety stock 1 day Kanban size 250 units Problem 2: Perkins Lighting wishes to employ a kanban in their new floor lamp production system. For the floor lamp base, they have provided the following information: Daily demand 300 units Holding cost $20/unit/year Order cost $10/order Lead time 2 days Safety stock 600 units Find the size of the kanban and the number of kanbans required.

ANSWERS Problem 1: Demand during lead time = 1, 500 Safety stock = 1, 500 Therefore: Maximum inventory level = 1, 500 + 1, 500 = 3, 000 Number of kanbans needed = maximum inventory level/kanban size = 3000 / 250 = 12 Problem 2: Daily demand 300 units Holding cost $20/unit/year Order cost $10/order Lead time 2 days Safety stock 2 days demand Find the size of the kanban and the number of kanbans required. Assume that the size of the kanban is the EOQ:

Q=

2 * Demand * Order cost Holding cost

2 *300 *300 *10 20

= 90, 000 = 300 units

kanban size = 300

Number of kanbans = (demand during lead time + safety stock) / size of kanban = [(2 *300) + 600] / 300 = 1200 / 300 = 4 kanbans