Lou\'s Bakery has established that JIT should be used for chocolate chips due to
ID: 461670 • Letter: L
Question
Lou's Bakery has established that JIT should be used for chocolate chips due to the high probability of the kitchen heat melting the chips. The average demand is 150 cups of chocolate chips per week. The average setup and processing time is 1/4 day. Each container holds exactly 2 cups. The current safety stock factor is 5 percent. The baker operates six days per week. a.) How many Kanbans are required for the bakery? b.) What is the maximum authorized inventory? c.) If the average setup and processing time is increased to 3/8 of a day due to a process change, what are the new answers to (a) and (b)?
Explanation / Answer
! week = 6 operating days
Average Demand = 150 cups per week
Average Setup and processing time (lead time) = 1/4 day = 1/4/6 week = 0.04167 week
Standard container quantity = 2 cups
Safety stock factor = 5%
(a) Number of Kanbans required = Demand * ( LeadTime + Safety stock factor) / standard container quantity
= 150*1/4/6*(1+5%) /2 = 3.3
(b) Maximum authorised inventory = 3.3*2 = 6.6
(c) Average setup and processing time = 3/8/6 weeks
Number of Kanbans required = 150*3/8/6*(1+5%) /2 = 4.92
Maximum Authorsed Inventory = 4.92*2 = 9.84
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