A two-workstation cell uses a kanban system to produce 400,000 parts per year. Expected leadtime to replenish a container is 0.75 hours (i.e. 45 minutes). Parts cost $60 and have an inventory opportunity cost of 20%. There are three material handling options available:

Manual - annual fixed cost of $25,000, cost per trip = $0.15, Max load size = 2;

Push Cart - annual fixed cost of $25,000 + $5,000 initial investment (amortized over 3 years), cost per trip = $0.25, Max load size = 20; and

Forklift - annual fixed cost of $25,000 + $75,000 initial investment (amortized over 6 years), cost per trip = $0.50, Max load size = 500.

Note: The company uses a MARR of 10% for all investments.

Workstation 1 has an external setup of 0.45 hours and a unit processing time of 0.05 hours. Workstation 2 has an external setup of 0.70 hours and a unit processing time of 0.04 hours.

a) Specify the following system design parameters: container size, material handling type, # kanban that will be feasible and minimize material handling cost.

b) Given that there are significant setups, how many kanbans will be necessary to authorize a production run? What will be the utilization of each workstation?

c) How would the system be different if it was controlled by CONWIP versus Kanban?