Practice Problem: Just-in-Time Kanban System

Problem 1:
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.

1
 ANSWERS

Problem 1:

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:

2 * Demand * Order cost 2 * 300 * 300 *10

Q= = = 90, 000 = 300 units
Holding cost 20

∴ kanban size = 300

Number of kanbans = (demand during lead time + safety stock) / size of kanban

= [(2 * 300) + 600] / 300 = 1200 / 300 = 4 kanbans