Using the Workbook
The CD-ROM Workbook contains the kanban calculation form to help with the calculations for the kanban size . Use this form to calculate your kanban quantities . The workbook also contains the answers to the examples in Figures 4-9 and 4-10. Additionally, to facilitate the use of the equations, the Workbook and Figure 4-26 contain a summary of the equations presented in this chapter.
Figure 4-26: Summary of Equations for Using Method 1 to Calculate the Kanban Size.
In this chapter you learned how to calculate the kanban quantities for your process. We proposed two methods for determining the quantities :
Calculate the optimal kanban quantity based on your current process data.
Use the current schedule quantity to set up the kanban.
Both methods have decided benefits. Method 1 allows you to optimize the kanban quantities based on the current state of the process, which requires accurate data gathering to make sure you get true results. Figure 4-26 summarizes the equations for using this method, and Figure 4-27 ties these equations to the replenishment interval worksheet.
Figure 4-27: Application of the Forms to the Replenishment Interval Worksheets.
If the initial results do not look correct when using Method 1, then look at these areas for possible errors:
Container sizes force added inventory
Incorrect production data ”production requirements, scrap, downtime, and changeovers
Incorrect buffer assumptions
Incorrect capacity assumptions
Method 2 allows you to avoid the calculations and quickly determine the kanban quantities. However, this method maintains the potential excesses of the current schedule and achieves no calculated inventory reductions.
Regardless of which method you select, when reducing the kanban quantities, use the techniques presented in Chapter 9 to make the reductions. Remember that there is no free lunch , so don't arbitrarily reduce quantities. See Figures 4-14 through 4-17 for examples of how the continuous improvement process can dramatically affect the kanban quantities.
When you begin the process of implementing supplier kanbans, use demand data to develop the order quantity and buffer quantity. Follow the steps layed out in the chapter to calculate these quantities. Once you have these quantities, conduct a quick stockout analysis to confirm the appropriateness of the buffers.
When implementing supplier kanbans, make sure that the supplier agrees to your plans. To develop the kanban quantities, use the information in this chapter to determine the necessary buffers. We also propose use of confidence intervals to handle demand variation.
Use the same process proposed for the supplier kanban to size finished goods kanbans. Do not make a finished goods kanban your first project since learning kanban at the customer's expense may not be the wisest move.
When you have the kanban sized , look at the potential savings. Savings can come from inventory reductions, space reductions, carrying cost reductions, and elimination of obsolescence cost.
Review Appendix A if you have concerns about how EOQ compares to the proposed calculation process. Appendix E proposes an EOQ model and contrasts EOQ versus kanban. Regardless of the potential savings from using the EOQ model, you do not achieve the operational benefits of kanbans without implementing kanban. Additionally, you have to store the inventory calculated by the EOQ somewhere even if you have a lower batch cost.
Finally, the form in the CD-ROM Workbook will help you calculate the replenishment interval, buffer, and container quantities for your kanban.