Name:
Krupp Refrigeration, Inc., is trying to reduce inventory and wants you to install a Kanban system for
compressors on one of its assembly lines. Determine the size of the Kanban and the number of kanbans
(containers) needed.
Setup Cost: $10
Annual holding cost per compressor: $100
Daily production: 200 compressors
Annual usage: 25,000 (50 weeks X 5 days each X daily usage of 100 compressors)
Lead time: 3 days
Safety stock: 0.5 day’s production of compressors
𝑑
𝑝
A) Size of container (Q) = √2𝐷𝑆/𝐻(1 − )
100
= √2𝑋500𝑋10/100(1 − 200)
= √10,000/(100𝑋50)
= 100
B) Number of Kamban (Container) = Demand during lead time + Safety Stock / Size of Container
= (3X100) + 100/ 100
= 300+100/ 100
= 400/100
= 4 Containers