3. A two-workstation cell uses a kanban system to produce 200,000 parts per year

Question

3. A two-workstation cell uses a kanban system to produce 200,000 parts per year. Expected leadtime to replenish a container is 0.5 hours (i.e. 30 minutes) Parts cost $50 and have an inventory opportunity cost of 20%. There are three material handling options available: Manual - annual fixed cost of $25,000, cost per trip $0.12, Max load size 2; Push Cart annual fixed cost of $25,000+$5,000 initial investment (amortized over 5 years), cost per trip = $0.15, Max load size-20, and Forklift- annual fixed cost of $25,000 $80,000 initial investment (amortized over 8 years), cost per trip = $0.50, Max load size-500 Note: The company uses a MARR of 15% for all investments.

Explanation / Answer

Three material handling option available, from that best option will be : 1. Manual Annual Fixed cost 25000 cost per trip 0.12 Max Load Size 2 Total Parts 200000 No. of Trip (200000/2) 100000 cost for trip (100000*0.12) 12000 Total cost (+25000+12000) 37000 2. Push Cart Annual Fixed cost 25000 cost per trip 0.15 Max Load Size 20 Total Parts 200000 No. of Trip (200000/20) 10000 cost for trip (10000*0.15) 1500 Initial Investment 5000 MARR 15% Return (5000*15%) 750 Amortized Cost (5000/5) 1000 Total cost (25000+1500-750+1000) 26750 3. Forklift Annual Fixed cost 25000 cost per trip 0.5 Max Load Size 500 Total Parts 200000 No. of Trip (200000/500) 400 cost for trip (10000*0.50) 200 Initial Investment 80000 MARR 15% Return (5000*15%) 12000 Amortized Cost (80000/8) 10000 Total cost (25000+200-12000+10000) 23200 Here, Machine Handling Cost for option, Manual 37000 Push Cart 26750 Forklift 23200 So it advisable to go with option Forklift as it will cost lower than other option.

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