9. The word is kanban, and it is closely associated with JIT. It
relies on visual or other simple signals to indicate when items
need to be “pulled.” It is symbolic of the waste reduction, distance
10. Standardized, reusable containers within the plant: in ship-
ping; protect the specific quantities to be moved; reduce weight and
disposal costs; generate less wasted space in trailers; and require
11. Lean production is applicable everywhere. It ranges from
lean layouts at McDonald’s kitchens (see the Global Company
16.1 Demand during lead time-of 2: (1,000 2) = 2,000
Safety stock (1/2 day) 500
Maximum inventory level 2,500
2,500 (Maximum inventory level) 5
500 (Kanban size) =
16.2 Demand during lead time 125
187.5 (Maximum inventory level) 3.75 4
50 (Kanban size) =
256 CHAPTER 16 JIT, TPS, AND LEAN OPERATIONS
Demand during lead time
= 160 (= 16 Days Daily usage
of 10)
Safety stock
= 80 (= 4 Daily production of
20)
Therefore, maximum inventory
should be
= 240 subassemblies
Because the kanban size is 50 subassemblies, 5 kanbans are ap-
propriate (240/50), rounded from 4.8.
16.3 First, we determine the kanban size. To do this, we deter-
mine the production order quantity (see discussion in
Chapter 12), which determines our kanban size.
2 2(2,500)(30)
10
120 1
120
150,000 2,500 50
60
p
DS
Qd
Hp
==
−
−
= = =
Then we determine the number of kanbans:
16.4 First, we must determine the kanban size. To do this, we
determine the production order quantity (see discussion in
Chapter 12), which determines our kanban size.
16.5 D = 2,000; H = $12; S = $30
2(2,000)(30)
(a) 100 lamps
12
EOQ ==
2,000(30) 100(12)
(b) $1,200
100 2
TC = + =
2,000
(c) No. of orders 20 orders/year
100
==
16.6 D = 2,000; H = $20; S = $0.50
2(2,000)(0.50)
(a) 10 lamps
20
EOQ ==
2,000
(b) No. of orders 200 orders/year
10
==
2,000 (0.5) 10(20)
(c) Total annual cost 10 2
1000 200 100 100 $200
10 2
=+
= + = + =
16.7 With JIT, purchase/delivery of goods immediately precedes
demand. The decrease in EOQ for lamps, from 100 to 10,
increases deliveries from 20 to 200. With the new relation-
ship with Specialty Lighting, Discount-Mart has reduced
its inventory costs, a usual pattern for companies using JIT
purchasing.
16.8
2
1
DS
Qd
Hp
=
−
where D = annual demand, S = setup or order cost,
H = holding cost, d = demand rate, p = production rate.
Solving for S (setup cost):
22120
1120 12 1 960
2 2 31,200
14,400 12 (1 0.125) $2.42
62,400
d
QH p
SD
− −
==
−
==
$2.42/setup 60 minutes/hour
Setup time $20 / hour
7.26 minutes/setup (which is .12 hours)
=
=
16.9
2
1
DS
Q
d
Hp
=
−
where D = annual demand, S = setup or order cost,
H = holding cost, d = daily demand rate, p = daily produc-
tion rate. Solving for S (setup cost):
22150
1150 10 1 1000
2 2 39,000
22,500 10 (1 0.15) $2.45
78,000
d
QH p
SD
− −
==
−
==
$2.45/setup 60 minutes/hour
Setup time $40 / hour
3.675 minutes/setup
=
=
2
2
(1 / )
(a) Using the model 2
200 10 (1 100 /800)
2 30,500
Q H d p
SD
−
=
−
=
16.10
S = $5.74
2 2(20,000)(20) 800,000 800,000 4,359 66
250(1 0.266) 183.5
80
250 1
1300
p
DS
Qd
Hp
= = =
−
−
−
Then we determine the number of kanbans:
Demand during lead time = 240 (= 3 days Daily usage of 80)
Safety stock = 150 (= 1/2 Daily production of 300)
Therefore, maximum inventory should be = 390 mainshafts.
Because the kanban size is 66 mainshafts, 5.9 kanbans are
appropriate (390/66). This can be rounded to 6.
258 CHAPTER 16 JIT, TPS, AND LEAN OPERATIONS
3. When discussing JIT in services, the text notes that suppliers,
layout, inventory, and scheduling are all used. Provide an example
of each of these at APH:
4. When a doctor proposes a new surgical procedure, how do
The request for changes and all new products goes to the Medical
Economics Outcomes Committee. Reducing the proliferation of
• The company promised Oxford employees that their
paychecks would continue.
• It recruited volunteers to move temporarily to a Michigan
plant where some coupling production was started.
• Caterpillar built a new temporary supply chain that
pieced together the capability of many plants.
At Toyota:
The support that parts makers provided Toyota during its
crisis helps indicate why Japan’s auto companies return the
loyalty—often to the detriment of U.S. and other foreign parts
makers. Toyota and Aisin didn’t bother to approach any foreign
companies during the crisis, a Toyota spokesman says, because
“there were no foreign suppliers in a position to help us.”
2001 Wall Street Journal article. “We trusted them.”
Indeed, as the first valves arrived at Toyota factories, Aisin
told the suppliers it would pay for everything, from drills and
overtime pay to lost revenue and depreciation. And Toyota prom-
etc. is to continue with JIT. JIT works, and it works in spite
of a catastrophe. The efficiencies are just too overwhelm-
4. Policy changes:
• At Caterpillar management is considering adding some
256 CHAPTER 16 JIT, TPS, AND LEAN OPERATIONS
Demand during lead time
= 160 (= 16 Days Daily usage
of 10)
Safety stock
= 80 (= 4 Daily production of
20)
Therefore, maximum inventory
should be
= 240 subassemblies
Because the kanban size is 50 subassemblies, 5 kanbans are ap-
propriate (240/50), rounded from 4.8.
16.3 First, we determine the kanban size. To do this, we deter-
mine the production order quantity (see discussion in
Chapter 12), which determines our kanban size.
2 2(2,500)(30)
10
120 1
120
150,000 2,500 50
60
p
DS
Qd
Hp
==
−
−
= = =
Then we determine the number of kanbans:
16.4 First, we must determine the kanban size. To do this, we
determine the production order quantity (see discussion in
Chapter 12), which determines our kanban size.
16.5 D = 2,000; H = $12; S = $30
2(2,000)(30)
(a) 100 lamps
12
EOQ ==
2,000(30) 100(12)
(b) $1,200
100 2
TC = + =
2,000
(c) No. of orders 20 orders/year
100
==
16.6 D = 2,000; H = $20; S = $0.50
2(2,000)(0.50)
(a) 10 lamps
20
EOQ ==
2,000
(b) No. of orders 200 orders/year
10
==
2,000 (0.5) 10(20)
(c) Total annual cost 10 2
1000 200 100 100 $200
10 2
=+
= + = + =
16.7 With JIT, purchase/delivery of goods immediately precedes
demand. The decrease in EOQ for lamps, from 100 to 10,
increases deliveries from 20 to 200. With the new relation-
ship with Specialty Lighting, Discount-Mart has reduced
its inventory costs, a usual pattern for companies using JIT
purchasing.
16.8
2
1
DS
Qd
Hp
=
−
where D = annual demand, S = setup or order cost,
H = holding cost, d = demand rate, p = production rate.
Solving for S (setup cost):
22120
1120 12 1 960
2 2 31,200
14,400 12 (1 0.125) $2.42
62,400
d
QH p
SD
− −
==
−
==
$2.42/setup 60 minutes/hour
Setup time $20 / hour
7.26 minutes/setup (which is .12 hours)
=
=
16.9
2
1
DS
Q
d
Hp
=
−
where D = annual demand, S = setup or order cost,
H = holding cost, d = daily demand rate, p = daily produc-
tion rate. Solving for S (setup cost):
22150
1150 10 1 1000
2 2 39,000
22,500 10 (1 0.15) $2.45
78,000
d
QH p
SD
− −
==
−
==
$2.45/setup 60 minutes/hour
Setup time $40 / hour
3.675 minutes/setup
=
=
2
2
(1 / )
(a) Using the model 2
200 10 (1 100 /800)
2 30,500
Q H d p
SD
−
=
−
=
16.10
S = $5.74
2 2(20,000)(20) 800,000 800,000 4,359 66
250(1 0.266) 183.5
80
250 1
1300
p
DS
Qd
Hp
= = =
−
−
−
Then we determine the number of kanbans:
Demand during lead time = 240 (= 3 days Daily usage of 80)
Safety stock = 150 (= 1/2 Daily production of 300)
Therefore, maximum inventory should be = 390 mainshafts.
Because the kanban size is 66 mainshafts, 5.9 kanbans are
appropriate (390/66). This can be rounded to 6.
258 CHAPTER 16 JIT, TPS, AND LEAN OPERATIONS
3. When discussing JIT in services, the text notes that suppliers,
layout, inventory, and scheduling are all used. Provide an example
of each of these at APH:
4. When a doctor proposes a new surgical procedure, how do
The request for changes and all new products goes to the Medical
Economics Outcomes Committee. Reducing the proliferation of
• The company promised Oxford employees that their
paychecks would continue.
• It recruited volunteers to move temporarily to a Michigan
plant where some coupling production was started.
• Caterpillar built a new temporary supply chain that
pieced together the capability of many plants.
At Toyota:
The support that parts makers provided Toyota during its
crisis helps indicate why Japan’s auto companies return the
loyalty—often to the detriment of U.S. and other foreign parts
makers. Toyota and Aisin didn’t bother to approach any foreign
companies during the crisis, a Toyota spokesman says, because
“there were no foreign suppliers in a position to help us.”
2001 Wall Street Journal article. “We trusted them.”
Indeed, as the first valves arrived at Toyota factories, Aisin
told the suppliers it would pay for everything, from drills and
overtime pay to lost revenue and depreciation. And Toyota prom-
etc. is to continue with JIT. JIT works, and it works in spite
of a catastrophe. The efficiencies are just too overwhelm-
4. Policy changes:
• At Caterpillar management is considering adding some