A Company Uses a Kanban System

question 124

Essay

A company uses a kanban system.The daily demand for part A is 100 units.The average waiting time for a container of parts is 0.2 day.The processing time for a container of part A is 0.1 day,and a container holds 5 units.If the company wishes to use a 10% policy variable,how many containers are needed?

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Definitions:

After-tax Cash Flows

After-tax cash flows are the net cash flows a company generates after accounting for taxes.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life.

Equivalent Annual Annuity

The annual cash flow of an investment that yields the same present value as the investment’s costs, used in capital budgeting to compare the profitability of investments.

Payback

The period of time required for the return on an investment to "pay back" the initial capital outlay.