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?

---

Definitions:

Days' Sales

The metric used to evaluate how efficiently a company can convert its inventory into sales, often expressed as days' sales in inventory.

Receivables

All money claims against other entities, including people, business firms, and other organizations.

Current Liabilities

Short-term financial obligations a company owes and is expected to pay within a year, such as accounts payable and short-term loans.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.