Kanban System in Just in Time Production

Kanban or a kanban system is a type of a signaling system used in a pull production process and/or EOQ system to manage wip and/or inventory between processes or tasks, the signaling system can be cards, containers or squares to identify where materials are stored. Where the containers or squares are empty, the cards or the container itself can be used as the indication for the operators to produce more products.

The number of kanban cards can be determined by using this formula :

                                        Demand*Lead time*(1+Safety Stock)
No of kanban cards= ————————————————-
                                             The number of units produced

To understand it further, consider the example below:

Gorge Pty Ltd, a company that makes different types of steel dies, is going to change its manufacturing system to a kanban pull system. One
of the parts required to produce a product 001 is part A and part As are made in batches of 20 units. The manufacturing cell which makes part
A can respond to an order for a batch of part A in 2 hours. The assembly cell which assembles product 001 has an assembly rate of 10 per hour. The production manager has decided to have 10% buffer in case there is a change in the number of demand for part A. Now it is necessary to determine the number of kanban card needed.