Question

Gingerbread Man Inc. produces short runs of cakes with a daily demand of 500 cakes that are shipped to grocery stores. The owner, Mr. Pillsbury Doughboy, wants to try to reduce inventory by changing to a Kanban system and decides to use 5 kanbans. He informs you that his safety stock needs to be 0.5 days and that he requires a production lead time of 3 days. What should be the container capacity in this system

Answer 1

350 cakes

Step-by-step explanation:

Given that:

Daily demand = 500 cakes

Production lead time = 3

Safety stock = 0.5 days

Thus; = 500 cakes × 0.5

= 250 cakes

However, the production for 3 days will be = 500 cakes/day × 3 days

= 1500 cakes

The total requirement = ( 1500 + 250 ) cakes

= 1750 cakes

The kanban system = 5 kanbans

∴

For this system, the container capacity = 1750/5

= 350 cakes in each kanban.