Arvin Automotive, a company that makes muffler assemblies for the Big Three, is committed to the use of Kanban to pull material through its manufacturing cells. Arvin has designed each cell to fabricate a specific family of muffler products. Fabricating a muffler assembly involves cutting and bending pieces of pipe that are welded to a muffler and a catalytic converter. The mufflers and catalytic converters are pulled into the cell based on current demand. The catalytic converters are made in a specialized cell.
Catalytic converters are made in batches of 10 units and are moved in special hand carts to the fabrication cells. The catalytic converter cell is designed so that different types of catalytic converter can be made with virtually no setup loss. The cells respond to an order for a batch of catalytic converters in approximately four hours. Because the catalytic converter cell is right next to the muffler assembly fabrication cell, transportation time is virtually zero.
The muffler assembly fabrication cell averages approximately eight assemblies per hour. Each assembly uses the same catalytic converter. Due to some variability in the process, management has decided to have safety stock equivalent to 10 percent of the needed inventory.
Required:
(a) Determine the average number of units demanded per period. 1mark
(b) Determine the safety stock needed support operation. 1mark
(c) Calculate the number of Kanban sets. 2marks
(d) Comment on the answer in (c).