2. If a business wants to reduce inventory by changing to a kanban system. How many containers are needed if daily demand is 1000 units, lead time is 2 days, safety stock is ¼ day, and container size is 475 units?
Expert Answer
The formula for the kaban system is N = {DT(1 + X)/C}
Given Data Demand = 1000 Units
Lead Time = 2 Days
Safety Stock = 1/4 day
Container Size = 475 Units
Where;
N = Number of Containers
D = Planned Usage Rate
T = Average Waiting Time
X = Buffer or Safety Stock
C = Capacity of Standard Container
N = {( 1000 Units )
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