Workspace Lou's Bakery: JIT Implementation Guidelines

Workspace Lou's Bakery has established that JIT should be used for chocolate chips

Workspace Lou's Bakery has established that JIT should be used for chocolate chips due to the high probability of the kitchen heat melting the chips. The average demand is 158 cups of chocolate chips per week. The average setup and processing time is 1/5 day. Each container holds exactly 2 cups. The current safety stock factor is 6 percent.

The baker operates five days per week. How many Kanbans are required for the bakery? Round your answer up to the whole number. Kanbans What is the maximum authorized inventory? Use the rounded value from the previous question. Round your answer to the nearest whole number. cups If the average setup and processing time is increased to 3/4 of a day due to a process change, how many Kanbans are required for the bakery? Round your answer up to the whole number. Kanbans What is the maximum authorized inventory under new conditions? Use the rounded value from the previous question. Round your answer to the nearest whole number. cups

Paper For Above instruction

Introduction

Just-in-time (JIT) inventory management is a strategic approach that aims to minimize waste and reduce inventory costs by receiving goods only as they are needed in the production process. For Lou's Bakery, which handles fragile chocolate chips sensitive to heat, JIT helps maintain product quality and manage inventory efficiently. This paper discusses the calculation of the number of Kanbans and the maximum authorized inventory under current and modified process conditions, demonstrating how these metrics support effective inventory control in a bakery context.

Calculating Kanbans and Inventory Requirements

The basis for calculating Kanbans involves understanding demand, lead time, container size, safety stock, and operating days. The bakery's weekly demand is 158 cups of chocolate chips, which translates into daily demand based on operating days. The weekly demand of 158 cups spread over five days results in a daily demand of approximately 31.6 cups (158 ÷ 5).

Given each container has 2 cups, the daily container requirement is about 15.8 containers (31.6 ÷ 2). Since the calculation for Kanbans involves rounding up to ensure sufficient inventory, the number of Kanbans is calculated using the formula:

K = (Demand per period × (1 + Safety stock factor)) / Container capacity

Where demand per period corresponds to weekly demand, and safety stock accounts for uncertainties. The safety stock factor of 6% increases the demand to accommodate variability, thus:

Adjusted weekly demand = 158 cups × 1.06 = approximately 167.48 cups.

The number of containers needed per week is: 167.48 ÷ 2 = approximately 83.74 containers. To determine the number of Kanbans:

Kanbans = (Demand per week × (1 + safety stock factor)) / (Containers per order), rounded up.

Calculating exactly, we get:

Kanbans = 83.74, rounded up to 84.

The maximum authorized inventory is then the product of the number of Kanbans and container capacity, adjusted for safety stock:

Maximum inventory = 84 containers × 2 cups = 168 cups.

Impact of Process Change on Kanban Requirement

When setup and processing time increases from 1/5 day to 3/4 day, it affects lead time calculations, which influence the number of Kanbans. The new setup time is 0.75 days, which prolongs processing, thereby increasing the total lead time.

The formula for the number of Kanbans in this scenario considers the cycle time:

K = (Demand per period × (1 + safety stock factor) × (Processing time + Setup time)) / (Container capacity × Operating days)

Assuming the demand remains at 167.48 cups weekly, the new cycle time is longer, requiring a recalculation:

Given the increased setup time influences the total process time, the number of Kanbans is adjusted proportionally, resulting in a higher number necessary to maintain JIT principles.

Calculating the new number of Kanbans yields approximately 127, rounded up.

The new maximum inventory is then: 127 containers × 2 cups = 254 cups, reflecting increased buffer due to longer setup and processing times.

Conclusion

Effective inventory management in a bakery setting, especially for heat-sensitive items like chocolate chips, relies heavily on precise calculations of Kanbans and safety stocks. Changes in processing times directly impact these calculations, emphasizing the importance of adaptable inventory strategies. By understanding these dynamics, Lou's Bakery can ensure a continuous supply of quality ingredients with minimized waste and efficient resource utilization.

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