uestion 16: Imagine comparing a manufacturing operation using regular lot-sizing

Question

uestion 16: Imagine comparing a manufacturing operation using regular lot-sizing and the same operation with a kanban/lean production approach. What would be your expectations of the difference between the total cost Gi.e., inventory holding costs + setup/ordering costs) of each? (a) (b) (c) (d) Inventory holding cost will increase nonlinearly with inventory Total costs will be lower for the regular lot-size operation Total costs will be lower for the kanban/lean production operation The order quantity will be larger for the kanban/lean production approach As long as the total quantity is the same, total costs will be the same (e)

Explanation / Answer

Ans: c. Total costs will be lower for the Kanban/lean production operation. (This is the essence of Kanban).

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