Maggie Moylan Motorcycle Corp. uses kanbans to support its transmission assembly
ID: 366606 • Letter: M
Question
Maggie Moylan Motorcycle Corp. uses kanbans to support its transmission assembly line. Determine the size of the kanban for the mainshaft assembly and the number of kanbans needed.
Setup cost
$20
Annual holding cost
$220 per mainshaft
Daily production
320 mainshafts/day
Annual usage
Lead time
3 days
Safety stock
0.50 days' production
Kanban container size=___mainshafts(round your response to the nearest whole number)
Number of Kanbans=______kanbans (round your response to the nearest whole number)
Setup cost
$20
Annual holding cost
$220 per mainshaft
Daily production
320 mainshafts/day
Annual usage
25,000(50weeks times ×5 days each times × daily usage of 100 mainshafts)Lead time
3 days
Safety stock
0.50 days' production
Explanation / Answer
Setup cost (S) = $20
Annual holding cost of mainshaft assembly (H) = $220 per unit
Daily production (p) = 320 main shafts per day
Annual usage (D) = 25,000 (= 50 weeks )×5 days each x daily usage of 100 mainshafts)
Lead time = 3 days
Safety stock = 0.5 day's production
Daily usage (d) = 100
------------------------------------------------
First calculate the Economic Production Order Quantity = Q^2 =2DS / H * (1 (d/p))
Here, D = Annual Demand = 25,000
S = Setup Cost = $20
H = Annual Holding Cost = $220 per unit
d = daily demand = 100 units,
p = daily production = 320 units
Applying all the values to the formula given,
( Q square ) = Q^2 = (2 * D * S ) / H * (1 – (d/p)) = (2 * 25000 * 20) / 220 (1 – (100 / 320))
Hence Kanban container size Q = 81 units (after rounding off)
Number of kanbans (container) needed = (Demand during lead time + Safety stock ) / Container size
= ((3* 100 ) + 50) / 81
= 4.320
= 4 (after rounding off)
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