Question

A supplier of instrument gauge clusters uses a Kanban system to control material flow. The gauge cluster housings are transported five at a time. A fabrication center produces approximately 18 gauges per hour. It takes approximately two hours for the housing to be replenished. Due to variations in processing times, management has decided to keep 35 percent of the needed inventory as safety stock. How many Kanban card sets are needed?

Answer 1

The supplier of instrument gauge clusters needs 10 Kanban card sets to control the material flow, taking into account the demand during the replenishment time and the additional safety stock.

Step-by-step explanation:

To determine the number of Kanban card sets needed by the supplier of instrument gauge clusters, we must calculate the demand during the replenishment time, add the safety stock, and then determine the total number of cards required.

Step-by-Step Calculation:

1. Determine the total demand during lead time: Gauge production rate is 18 gauges per hour. Replenishment lead time is 2 hours. Therefore, total demand during lead time is 18 gauges/hour * 2 hours = 36 gauges.
2. Calculate safety stock: Safety stock is 35% of the needed inventory. Additional stock needed as safety is 35% * 36 gauges = 12.6 gauges. It's necessary to round up since we can't have a fraction of a gauge, resulting in 13 gauges for safety stock.
3. Calculate total inventory needed: Total demand during lead time (36 gauges) plus safety stock (13 gauges) equals 49 gauges.
4. Determine the number of Kanban card sets: Since gauges are transported five at a time, we divide the total inventory by the transport lot size: 49 gauges / 5 gauges per card set = 9.8. Again, we round up to the nearest whole number, which is 10 Kanban card sets.

Based on the demand, lead time, and safety stock percentage, the supplier needs 10 Kanban card sets to control the material flow.