A Company Is Using Kanban Containers $\alpha$ ) of 20%The Company Is Interested in Reducing the Number of Containers

question 29

Essay

A company is using Kanban containers.There are two adjacent work centers, a downstream (using) and an upstream (producing) one.The using work center has a production rate of 200 parts per day and each container holds 20 parts.It takes .5 days for a container to make the entire cycle from the time it leaves the upstream center until it is returned, filled with production, and leaves again.The manager wants a safety factor ( $\alpha$ ) of 20%.The company is interested in reducing the number of containers.
a.What is the number of containers currently in use?
b.If the number of parts a container holds is increased to 24 parts, how many containers are needed?
c.If the company wants the number of containers (holding 20 parts each) to be 5, what must the safety factor become?

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Definitions:

Unit Product Cost

The total cost associated with producing one unit of product, calculated by dividing total production costs by the number of units produced.

Predetermined Overhead Rate

A rate used to allocate estimated overhead costs to individual products or job orders based on a pre-selected cost driver.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, rent for the production facility, and salaries for indirect labor.

Departmental Overhead Rates

Specific overhead rates allocated to individual departments within a company, reflecting the distinct costs associated with operating each department.