Pauline Found Manufacturing, Inc., is moving to kanbans to support its telephone switching-board assembly lines. Determine the size of the kanban for subassemblies and the number of kanbans needed. Setup cost $30 Annual holding cost $100 per subassembly Daily production 25 subassemblies Annual usage 4 comma 500 (50 weekstimes5 days eachtimesdaily usage of 18 subassemblies) Lead time 16 days Safety stock 2 days' production Kanban container size = 98 units (round your response to the nearest whole number). Number of kanbans needed = 3 kanbans (round your response to the nearest whole number).

Container size = 52

Number of kanbans required ≈ 7 kanbans

Explanation:

Given the data in the question, to find the Kanban container size, we calculate the economic order quantity (EOQ) using the formula below :

Where

Annual usage A = 4500

Setup cost S = $30

Annual holding cost H = $100

Container size = √{(2×4500×30)÷100}  = √2700 = 51.96 ≈ 52

Container size = 52

Number of Kanbans required = (demand during lead time + safety stock) / container size

Where:

Demand during lead time = lead time (16) * daily usage (18)

Demand during lead time = 16*18 = 288

Safety stock = 2 days production, where daily production is 25 subassemblies.

Safety stock = 2*25 = 50 units

Container size = 52 units

Imputing the data into the equation, we obtain :

Number of kanbans required = (288 + 50)/52 = 338/50 = 6.5

Number of kanbans required ≈ 7 kanbans

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