Maggie Moylan Motorcycle Corp Uses Kanbans To Support Its Tr
Maggie Moylan Motorcycle Corp Uses Kanbans To Supportits Transmission
Determine the size of the kanban for the mainshaft assembly and the number of kanbans needed. Setup cost (S) =$20.00. Annual holding cost of mainshaft assembly (H)= $250 per unit. Daily production (p) = 300 mainshafts. Annual usage (D) = 20,000 units. Lead time = 3 days. Safety stock = 1/2 day's production of mainshafts. Daily usage (d) = 80 mainshafts.
Paper For Above instruction
Maggie Moylan Motorcycle Corporation employs a Kanban system to regulate its transmission assembly line, specifically focusing on the mainshaft component. The goal is to determine the optimal Kanban size and the number of Kanban cards required to efficiently support production while minimizing inventory costs and ensuring a smooth flow of materials.
Understanding the components influencing Kanban calculations is essential. The key variables provided include the setup cost (S) of $20 per order, the annual holding cost (H) of $250 per unit, a daily production rate (p) of 300 mainshafts, and an annual demand (D) of 20,000 units. The lead time from order placement to replenishment is 3 days, with safety stock set at half a day's production, and the daily usage rate (d) is 80 mainshafts.
Calculating the Kanban Size
The classical formula for the Kanban size (K) is derived from the economic order quantity principles but adapted for Just-In-Time (JIT) systems. It is expressed as:
K = (d × L) + Safety Stock
where d is daily demand, L is lead time in days, and Safety Stock accounts for variability during lead time. Given the data:
- d = 80 units
- L = 3 days
- Safety Stock = 0.5 × d = 0.5 × 80 = 40 units
Therefore, the Kanban size K is:
K = (80 × 3) + 40 = 240 + 40 = 280 units
This indicates that each Kanban card should authorize the production or movement of 280 mainshafts to meet demand and accommodate safety stock.
Calculating the Number of Kanbans Needed
The number of Kanbans (N) refers to how many cards are required to support the total demand over a given period, ensuring continuous flow without stockouts. The formula is:
N = (D / K) × (L + c)
where:
- D = annual demand = 20,000 units
- K = Kanban size = 280 units
- L = lead time in days = 3 days
- c = safety stock period in days, here approximated as 0.5 days or safety stock in units (already considered in K)
More accurately, the number of Kanbans can be calculated as:
N = (D / K) × (L + safety stock in days)
But in practical terms, the number of Kanbans is often estimated by:
N = (D × L) / K + safety stock in units / K
Alternatively, the straightforward approach is:
N = (D / K)
since the Kanban size K already includes safety stock, and demand rate is considered in the Kanban size calculation. Substituting values:
N = 20,000 / 280 ≈ 71.43
Rounding to the nearest whole number, approximately 72 Kanban cards are needed to support the transmission assembly line effectively, ensuring there is sufficient inventory during lead time and safety stock considerations.
Conclusion
By calculating the Kanban size as 280 units and requiring approximately 72 Kanban cards, Maggie Moylan Motorcycle Corporation can maintain a lean, efficient transmission assembly process. This approach minimizes inventory costs while providing sufficient buffers against variability in demand and lead time, embodying core principles of JIT manufacturing.
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