Due to rapid changes in technology, a telecommunications manufacturer decides to produce a router using just-in-time methods. Daily demand for the router is 10 units per day. The routers are built on racks that hold four at a time (i.e., the container size). Total processing and waiting time is 3.75 days. The process manager wants a safety factor of only 5 percent.
a. How many Kanbans are required?
b. What is the maximum authorized router inventory?
c. If you assume that one-half of the racks are empty and one-half full at any given time, what is the average inventory of routers?
d. What are the answers to a to c if due to process improvements the total processing and waiting time is reduce from 3.75 to 2.75 days?