Determine the Total Size of the KANBAN Loop

The expression "KANBAN loop" derives from the fact that KANBANs
cycle between supplier and customer wprk centers in a type of
feedback loop. KANBANs accompany production parts on the forward
flow, and cycle back to the supplying work center to advise when the
customer center has consumed the stock.

8. The next step involves determining the number of KANBANs
required to accommodate the mix of products and lot sizes
considered in points 1 to 7 above. A certain number of KANBANs is
required to justify WIP normally awaiting consumption by the
customer work center. Other KANBANs will be accumulated on the
planning board until a sufficient number justifies the production of
a new lot. The total number of KANBANs in the loop is determined
based on the supplying work center's constraints in respect to the
consumption patterns of the customer. This analysis was started by
targeting the bottleneck work center. A separate loop is determined
for each customer-supplier-part relationship.

Since most or all the parts produced by a single work center
share similar characteristics, the calculations performed in steps 1
to 7 above can often apply generically to all of them. This is
especially true (without being a prerequisite) if lot sizes can
remain uniform from one part to another, and where the consumption
volumes are generally uniform from one part to another.

Three general aspects must be considered to establish the number of
KANBANs in each loop.

8a) First, we have to ensure there are enough KANBANs in the loop
to allow the production of a complete lot size of the part being
analyzed. For instance, let's assume that KANBANs will be tagged to
skids containing 220 units and that the work center produces 250
parts per hour. For a 5.3 hour production lot, we are talking about
1325 parts. Rounding this to 1320 parts will prescribe 6 KANBANs <
1320/220 = 6) for the lot size itself.

8b) Next, we need to implement KANBANs to ensure the availability
of stock during the reaction time of the supplying work center to
start production on a part whose KANBAN reorder point has been
triggered. For instance, in the example above, if 6 KANBANs
accumulate on the KANBAN planning board, it would trigger a
production lot of 6 KANBANs. However, before this can be executed,
in-process lots of another part may need to be completed. So there
has to be some inventory (with KANBANs attached) at the customer
site to absorb that delay. We also need KANBANs to address the
customer consumption lot size if it is significantly larger that of
the KANBAN.

Let's start with reaction time. It varies as a function of
several factors. Two important ones is the relative size of the
lots, and the number of different products in competition for the
same resource (work center).

When a part reaches its KANBAN reorder point, the work center
will probably be producing some other part. If the average lot size
for this work center is 5.3 hours, and setups take 1 hour, the
maximum reaction time to changeover will be 6.3 hours (assuming no
other part has more priority). The minimum reaction time will be 1
hour, for the setup. The average reaction time relative to the lot
size will be about 3.65 hours ([6.5 + l]/2). Stock must exist out
there to account for this reaction time. We must then convert these
3.65 hours into KANBANs by estimating how many parts the customer
will consume over that period. If, for example, the item has an
estimated demand of 3000 per month, this represents 9 per hour
(3000/[21 days * 16 hr.] = 9), or 34 over 3.65 hours. If a KANBAN
represents 220 items, this represents 0.15 KANBANs. Other issues
discussed below will probably justify the rest of the KANBAN;
eventually, we will round up to the nearest complete KANBAN (no
partial KANBANs are allowed in production).

It is foreseeable that the reaction time may at times be longer
than the one calculated above if several parts hit their KANBAN
reorder point simultaneously and thus become in competition for the
work center's capacity. This should not happen very often,
otherwise, it would indicate the work center is overloaded or that
the KANBAN loops need to be adjusted to increase the buffers.

The magnitude of the reaction time can be monitored physically if
the KANBAN system has not yet been implemented. The in-process
queues in front of the work center, measured in work hours, give a
good idea of the reaction time. Each "scheduled" order must wait the
length of time represented by the queue before being processed. Of
course, the implementation of the KANBAN system will naturally
shrink the queues 20 to 40% simply because better priority decisions
will result. Thus if the queue is 5 days long, use 3 days as an
initial competition-based reaction time. In our example, 3 days of
consumption represents 432 items, or 1.96 KANBANs (220 each).

**To Be Continued**

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