A Company Is Using Kanban Containers

question 27

Essay

A company is using Kanban containers. There are two adjacent work centers, a downstream (using) and an upstream (producing) center. The using work center has a production rate of 200 parts per day and each container holds 20 parts. It takes 0.5 days for a container to make the entire cycle from the time it leaves the upstream center till it is returned, filled with production, and leaves again. The manager wants a safety factor (α) of 20 percent. 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:

Brass Industry

Refers to the sector of the economy dedicated to the production and sale of brass products and materials.

Demand Function

Describes the relationship between the quantity of a good consumers are willing to buy and the price of the good, holding other factors constant.

Bertrand Competition

A market model in which two or more firms compete by setting prices, with each firm considering the price set by competitors when determining its own price.

Cournot Equilibrium Price

A concept in economics where competing firms reach a state of balance in which each firm's output decision is optimal, given the output decisions of other firms, leading to a stable price level in oligopolistic markets.