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 × 5 days each ×daily usage of 100 compressors)
Lead time = 3 days
Safety stock = 1/2day' s production of compressors
Krupp determined that the cost, on an hourly basis, of setting up equipment is $30.00
Is the given setup cost of $10.00 valid? If so, what is the ideal setup time?
Krupp later determines that the cost, on an hourly basis, of setting up equipment has now changed to $40.00.
What should the ideal setup cost and setup time be now?