An Important Mechanism for Lean Systems Is a Kanban System

question 120

Multiple Choice

An important mechanism for lean systems is a Kanban system. Which one of the following statements correctly describes the behavior of a two-card Kanban system?

• A) A withdrawal Kanban is issued to authorize production in the fabrication process.
• B) A production-ordering Kanban authorizes the assembly process to remove the materials from the storage location.
• C) The fabrication process produces certain units defined by the lot size and pushes them down to the assembly process.
• D) Containers must never be removed from the storage location without an authorizing withdrawal Kanban.

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Definitions:

Acid-Test Ratio

A stringent indicator of a company's short-term liquidity, calculated by dividing liquid assets by current liabilities.

Times Interest Earned

This is a financial ratio that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes.

Gross Margin Percentage

A financial metric that indicates the proportion of money left over from revenues after deducting the cost of goods sold, expressed as a percentage of total revenue.

Earnings Per Share

A measurement of a company's profitability, calculated by dividing net income by the number of outstanding shares of its common stock.