Lou's Bakery has established that JIT should be used for chocolate chips due to the high probability of the kitchen heat melting the chips. The average demand is 158 cups of chocolate chips per week. The average setup and processing time is 1/5 day. Each container holds exactly 2 cups. The current safety stock factor is 6 percent. The baker operates five days per week.
How many Kanbans are required for the bakery? Round your answer up to the whole number.
Kanbans
What is the maximum authorized inventory? Use the rounded value from the previous question. Round your answer to the nearest whole number.
cups
If the average setup and processing time is increased to 3/4 of a day due to a process change, how many Kanbans are required for the bakery? Round your answer up to the whole number.
Kanbans
What is the maximum authorized inventory under new conditions? Use the rounded value from the previous question. Round your answer to the nearest whole number.
cups
Full Answer Section
Maximum Authorized Inventory:
Kanban quantity (7 cups) x Number of Kanbans (4) + Safety Stock (6% of average weekly demand) = 28 cups + (6/100) x 158 cups = 50.48 cups (round to 50 cups)
Changes due to Increased Setup Time:
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New Lead Time: Setup and processing time (3/4 day) + Safety stock factor (0.06) = 0.96 day (round to 1 day)
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New Kanban Quantity (Q): Daily Demand (32 cups) x New Lead Time (1 day) = 32 cups (no rounding needed)
New Kanbans Required:
Kanban quantity (32 cups) / Container capacity (2 cups/container) = 16 Kanbans (round up to 17 Kanbans)
New Maximum Authorized Inventory:
Kanban quantity (32 cups) x Number of Kanbans (17) + Safety Stock (6% of average weekly demand) = 544 cups + (6/100) x 158 cups = 550.48 cups (round to 550 cups)
Answers:
- Kanbans required currently: 4
- Maximum authorized inventory currently: 50 cups
- Kanbans required with new setup time: 17
- Maximum authorized inventory with new setup time: 550 cups
Sample Answer
Kanbans and Inventory Management for Lou's Bakery
Calculations:
- Daily Demand: Weekly demand (158 cups) / Working days (5 days) = 31.6 cups/day (round to 32 cups/day)
- Lead Time: Setup and processing time (1/5 day) + Safety stock factor (0.06) = 0.2 day (round to 1/5 day)
- Kanban Quantity (Q): Daily Demand (32 cups) x Lead Time (1/5 day) = 6.4 cups (round up to 7 cups)
Kanbans Required:
Since each container holds 2 cups and the Kanban quantity is 7 cups, we need enough Kanbans to ensure 7 cups are always in the system: 7 cups / 2 cups/container = 3.5 containers (round up to 4 Kanbans)