Pauline Found Manufacturing, Inc., is moving to kanbans to support its telephone switching- board assembly lines. Determine the size of the kanban for subassemblies and the number of kanbans needed.
Setup cost = + 30
Annual holding cost = + 120 per subassembly
Daily production = 20 subassemblies
Annual usage = 2,500 (50 weeks * 5 days each * daily usage of 10 subassemblies)
Lead time = 16 days
Safety stock = 4 days> production of subassemblies.