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Managing Kanban Systems. Two primary control parameters for a Kanban System. Kanban container size ( n i ) Number of Kanbans ( k i ). Managing Kanban Systems. Determining Kanban container size ( n i ): Based on physical size of container Based on cost function –
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Managing Kanban Systems • Two primary control parameters for a Kanban System. • Kanban container size (ni) • Number of Kanbans (ki)
Managing Kanban Systems • Determining Kanban container size (ni): • Based on physical size of container • Based on cost function – • where c1ij– fixed material handling cost per time using technology j. • c2ij– variable cost per time • Di– demand for item i • hi– holding cost for item i
Managing Kanban Systems Determining Kanban container size (ni): To minimize the cost function with respect to ni,
Managing Kanban Systems Determining Kanban container size (ni): Ex.Consider a process with 3 distinct operations and demand of 200,000 per year and an annual holding cost of $2 per unit per year. Option Annual cost Cost per trip Max load size Manual $27,000 $.15 2 Push Cart $28,000 $.16 20 Forklift $50,000 $.90 500 Manual – ni,man* = = 300 cost = Push cart – ni,push* = = 310 cost = Forklift – ni,fork* = = 735 cost = nij* is greater than the kanban container size for Manual, Push Cart, and Forklift, therefore use container size.
Managing Kanban Systems • Determining Number of Kanbans (ki): • Determined by lead time(ti) to replenish – • represents the amount of inventory needed to cover the time between when a Kanban is sent from the output buffer to be refilled, until it returns filled. • The number of kanban is – • where l is a safety factor.
Managing Kanban Systems • How is lead time (ti) determined? • By observation – start with “too many” kanbans in the system. Mark the time when a kanban leaves the output buffer to be replenished. Record when the kanban returns to the output buffer. Record a number of observations and find the mean and standard deviation. To build in a safety factor, the lead time should be calculated as the mean plus 2 or 3 standard deviations.
Managing Kanban Systems • Determining Production Quantity: • Although rapid setup times are necessary for a kanban system to function effectively, there may be cases where technological or cost constraints make further reduction of setup time prohibitive. • Let si = setup time for item i. • Di = annual demand for item i. • Qi = lot size item i. • ti = time to produce item i. • Find the minimum Qithat satisfies:
Managing Kanban Systems • Determining Production Quantity: • Let si = setup time for item i. • Di = annual demand for item i. • Qi = lot size item i. • ti = time to produce item i. • Find the minimum Qi‘ that satisfies: • Then Qi = Max{ni,Qi‘}.
Managing Kanban Systems • Key factors which must be in place before implementing a kanban system: • Demand is approximately constant over a planning period • Small setup times • Available, flexible capacity • Disciplined workforce
Managing Kanban Systems • Managing demand variances. • Some products demand rates tend to vary by the seasons, but with some known forecast. How can a Kanban system be implemented in this type of environment? • Recall the number of kanban was found using: • If we can forecast D for some next time period, we can add or subtract kanbans from the system accordingly.
