1

KANBAN SYSTEMS

INTRODUCTION

1. Kanban (kahn-bahn) is a Japanese word that means

card or visible record.
2. In general context, it refers to a signal of some kind.
3. Thus, in the manufacturing environment, kanbans are
signals used to replenish the inventory of items used
repetitively within a facility.
4. The kanban system is based on a customer of a part
pulling the part from the supplier of that part.
5. The customer of the part can be an actual consumer of a
finished product (external) or the production personnel at
the succeeding station in a manufacturing facility
(internal).
6. Likewise, the supplier could be the person at the
preceding station in a manufacturing facility.
7. The premise of kanbans is that material will not be
produced or moved until a customer sends the signal to
do so.

WORKING OF KANBAN SYSTEMS

1.

Kanban is a production control system

2.

Communication takes place when a successor (upstream)

workstation issues a request for parts to the output buffer of a
predecessor (downstream) work station.

3.

When the desired level of stock of completed parts (in the buffer) is
depleted, the work center reacts to replace the removed parts and to
maintain a balanced, target level of finished parts.

4.

Kanban includes information on: (a) part type (b) number of units (c)
location of materials needed to produce them.

5.

Each type of part produced by a work center has its own Kanban, each
Kanban authorizes a particular number of units of that part type.

KANBAN AUTHORIZATION CONCEPT

1.

Each work center is responsible to keep a full container of

4
parts for each kanban allocated to that work center.

2.

If the container is not full for a kanban, then the

kanban authorizes production of the deficient units.

3.

When a deficient item is to be produced, material handler

proceeds to the predecessor (down stream) to requisition the
required parts/ material.

4.

As these parts are delivered, this workstation automatically

begins to replace this stock.

5.

All this action takes place just because of the appearance of

the material handler at output buffer to remove a container of
parts.

6.

No other production scheduling information is supplied to the

work center.

7.

By using this simple authorization procedure, kanban systems

avoid the need to maintain a direct information link between
the long range production plan and operational schedule.

Operation of SINGLE KANBAN SYSTEM

5
1. Work center at stage i attempts to
maintain one full container of parts
in the output buffer for each kanban.
2. When workstation i+1 requires parts,
the operator or material handler
transports a container of parts from
the output buffer of stage i to stage i+1
3. The operator first (must) removes the production
ordering kanban (POK) at stage i and place the
kanban on the stage i collection box.
4. POK kanbans are arranged into a production sequence
and moved to a scheduling board.
5. The worker at stage i checks the schedule board on
which the cards are arranged into the production
schedule.
6. This type of a single kanban system is used when
workstations are close together.

Operation of SINGLE KANBAN SYSTEM

Operation of SINGLE KANBAN SYSTEM

7
7.
8.

Essentially, the output buffer at stage i

is the input buffer at stage i+1.
The consecutive stages are linked by this
intermediate buffer of parts.

9.

Each part type can be assigned a

dedicated storage space. The size of the space corresponds to the
space required to store the number of parts defined by the set of
kanbans for that part. The need for the actual kanban is eliminated
because empty space is same as a kanban in the collection
box
(called kanban squares)
10. Each stage can either be a workstation or an entire department.
11. Lead time in kanban extends from the time a kanban is removed
from a container until that kanban re-enters the output buffer with a
full container of parts.

KANBAN FUNCTION

Work
cell

Kanban

Customer
order

Kanban

Ship
Final
assembly
Kanban

Kanban

Finished
goods

1
0
Purchased
Parts
Supplier

7
9

Raw
Material
Supplier

Kanban

1
1

Subassembly

Kanban

Operation of DUAL KANBAN SYSTEM

EXTRA
BUFFER 9
1.

2.
3.

Dual kanban systems are used

when large distances between
workstations dictate the need for
input buffers at workstations to
store raw materials in addition to
the output buffers used in the
single kanban system.
We continue to use the production ordering kanban (POK) of the single
system, but add withdrawal ordering kanbans (WOK) for each part
type.
The system has two loops:
a) The production ordering kanbans (POK) follow the same loop as
before - between the output buffer, the collection box, the schedule
board, the workstations and back to the output buffer.
b) The withdrawal ordering kanbans (WOK), also called
transportation
kanbans, serve as material requisitions. They loop between the
input buffer at stage i+1, their own collection box at stage i+1,
the output buffer at stage i and finally back to the input buffer at
stage i+1.

Operation of DUAL KANBAN SYSTEM

1
0
EXTRA
BUFFER

Operation of DUAL KANBAN SYSTEM

EXTRA
4. The material handler periodically
1
BUFFER
checks the withdrawal kanban (WOK)
1
collection box. If kanbans are
present the material handler moves
from stage i+1 to the output buffer
at stage i to obtain the parts
requisitioned by the withdrawal
ordering kanbans.
5. At stage i, the handler removes the production ordering kanban
(POK) and places them on the schedule board. The withdrawal
ordering kanban (WOK) is added to each container and then
they are moved to input at buffer at stage i+1.
6. The withdrawal ordering kanbans (WOK) are removed from the
container only when that containers first part is placed into
production at stage i+1.
7. The two loops therefore control the production and
transportation.

HYBRID SINGLE KANBAN SYSTEM

1
2

1.

Hybrid Single Kanban System uses push for order

releases and pull for part conveyance.

2.

Production schedule is prepared (from demand forecasts)

which lists the quantity of each item to be produced each
day.

3.

The work-center is made responsible for meeting this

schedule over the course of the day.

4.

Production authorization is provided by the

schedule, and production ordering kanbans (POK)
are eliminated.

5.

Withdrawal ordering kanbans (WOK) are still used to control

the conveyance of parts between work centers.

6.

WOKs are used in the same manner as in the dual kanban

system to control input buffers.

RULES FOR SCHEDULING KANBAN PRODUCTION

1.

Common rules for scheduling production are:

1
3 to size
If setup time is brief, then production quantities can be set equal

Single-Kanban Priority Rule:

a)
i.

of the container. The work center produces a batch size equal to the
quantity specified on a single kanban.
ii.

Any method of assigning priority to the kanbans pending production can

be adopted

iii.

FCFS (first come first serve) rules can be followed.

iv.

Or SPT (shortest possible time first) can also be followed.

Family Rules:

b)
i.

In some work areas, parts can be divided into families based on setup
requirements

ii.

A family of part may share same fixture or other tooling with quick
change overs being possible between parts in the same family.

iii.

In this case, we fill all the kanban orders for parts in the same family at
the same time.

iv.

Families can be scheduled on the basis that which family has been
waiting the longest.

RULES FOR SCHEDULING KANBAN PRODUCTION

c)

Minimum Economic Order Quantity:

1
4

To justify a set-up from an economic point of view, the operator

may
need to wait until a minimum number of kanbans of a particular
type are on the schedule board.
Signal Kanbans:

d)
i.

Used when minimum economic order quantity (EOQ) is

used.

ii.

EOQ may result from large set-up cost or time.

iii.

A signal that authorizes production of the EOQ is used.

iv.

The re-order point is determined, using standard inventory

models, i.e. lead time demand + safety stock point.

v.

Signal kanban is placed on the re-order point level

vi.

When the inventory level drops to this level, the signal

kanban is removed and used to initiate replenishment
order.

RULES FOR SCHEDULING KANBAN PRODUCTION

1
If machine set-ups are dependent on the sequence
5 of

Cyclical Production Continuous Time:

e)
i.

part types produced, parts may be produced in fixed,

repeating sequence, i.e. part A, then B, then C and so on.
ii.

The sequence is specified to minimize change over

time.

iii.

Each time a part type completes processing, kanban on the

schedule board for the next part type in the sequence are
counted and production is set to this amount.

Cyclical Production Periodic Review:

f)
i.

Use the same sequence as the continuous review case, but

produces each part type once every fixed time interval

ii.

At start of each point, the operator collects the kanban on the

schedule board. The quantity of each part type to be
produced in the period depends on the number of kanbans
collected and their container.

INTEGRATION THROUGH SUPPLY CHAIN

1.
2.

3.
4.
5.
6.

7.

8.

1
Kanbans are not restricted to internal suppliers only.
6
To operate effectively, members of entire supply chain, from
basic raw materials through finished products, must work
together to ensure a continuous re-supply of parts.
This usually involves multiple plant locations and multiple
companies.
Typically long term contracts are established to ensure the supply
of materials.
Frequent deliveries are made to replenish the consumed stock.
If supplier and customer are in close proximity, delivery trucks
may be in constant motion between the sites for high volume
industries.
At any point in time, we may have one loaded vehicle in motion
carrying parts to the customer, another vehicle in motion
returning to the facility that produces the raw parts, yet another
vehicle being filled at the production site and the final vehicle
being emptied at the customers location
The feasibility of this strategy depends on the total volume.

1.
2.

SPECIFYING PARAMETER
The kanban
system operates without high-level coordination.
1
VALUES
The control parameters for the system are the container
7

size and the number of kanbans for each part type.

Methods of setting the values of these parameters:
SELECTION OF CONTAINER SIZE:
3. Let ni be the number of units authorized by kanban for part
type i.
4. Inventory costs depend on the average inventory level, which
are usually small in kanban systems.
5. The average buffer inventory level is determined by the
maximum inventory level minus the expected number of
units on order.
6. The units on order are those which are currently in the
replenishment loop. Replenishment lead time and not the
container size, determine the average number of units on order.
7. The maximum inventory is ki . ni , where ki is the number of
kanbans for that part type i.

SPECIFYING PARAMETER
VALUES

SELECTION

6.
7.

8.

OF CONTAINER SIZE (cont. ..):

1
8

When the container is withdrawn from the buffer, all

the containers parts move to the next work center.
Normally, parts are entered into production at the
successor work center at a slow, intermittent pace
instead of using a full container at a time.
Therefore, on average, there are parts type i
pending use at the successor work center.

SPECIFYING PARAMETER
VALUES

SELECTION
OF CONTAINER SIZE (cont. ..):

1
9
loads per year.

9.

For an annual demand rate of Di and load size of ni, we move

10.

Load Size: Is the number of items that can be transported by the material
handler at one time while delivering parts from one work center to the other.
Depends on the method of transportation, i.e., technology used.

11.

Material handling, i.e. transportation of each load, has its own fixed cost
per trip.

12.

The cost model for selecting ni becomes:

Minimize

+ ; where ni Nj

where: = variable cost per move for

part type i, using technology j; Nj is maximum load size using
technology j; is holding cost of partially used container.
If holding cost is negligible, then cost will be minimized by setting ni = Nj

SPECIFYING PARAMETER

SELECTION
OF CONTAINER SIZE (cont. ..):

VALUES
15.

2
The part weight, size, shape, rigidity, packaging all interact with the
0
transporting technology being used to determine N .
j

16.

Typically, we use the largest container size allowed by the chosen

technology.

17.

From the model equation we can compare the cost for each
technology and select the cheapest option.

18.

Now,

Cost = +

= - + , putting this to zero,

we get:
=
( = optimum container size)
If is feasible for technology j, then this a contender.
If

is too large, then our choice should be to use N j .

EXAMPLE PROBLEM:
The bottom of a printer body goes through three steps: molding,
trimming and detailing. Table below gives the annual fixed cost, 2
cost
per load, and maximum transport size for three handling options.
1
Choose the container size and technology. The system will produce
200,000 printers per year. Annual inventory holding cost is $2 per
unit WIP.

Option
Manual
carry

Push Cart
SOLUTION:
Forklift

Annual
Cost

Cost per
trip

Max. Load
Size

$27,000

$0.15

$28,000

$0.16

20

$50,000

$0.90

500

1.

SELECTING THE NUMBER OF

2
KANBANS
The final control variable for each part type is the number
2
of kanbans in the production system.

2.

Maximum inventory of a part type i is given by the product of

the number of kanbans, Ki and the number of units authorized
per kanban, ni .

3.

When the first part is removed from a container in the work

centers output buffer, the kanban begins the replenishment
process.

4.

Parts associated with that specific kanban will not be needed

until
ni . Ki more units are requisitioned by the upstream
work center.
( See diagram in next slide to see the progression of kanbans )

2
3

SELECTING THE NUMBER OF

KANBANS (cont. )

6.

2
To avoid shortages, this kanban must return to the output
4

7.

buffer with a full container of parts before n i . Ki more units are

demanded.
Let parts be demanded at the rate of Di and expected lead time
to replenish a container is i .

8.

Shortages will be avoided on the average, if n i . Ki

9.

To handle randomness in demand and lead time, we add a

safety factor of .
Combining these factors, we set the number of kanbans
to the smallest integer, whereby Ki

10.

11.

Di .

Essentially, we set the target inventory equal to the lead time

demand (), plus some safety factor.

See Example on next slide.

EXAMPLE PROBLEM:
2
A punch press forms a variety of sheet metal parts.
5
A recent setup reduction team has reduced setup
time to two minutes. It is now feasible to produce as
few as six items at a time when a machine is set up
to make a part. The six items can be stacked and
moved as a single load.
Demand for one item is contractually set at 75 units
per day.
With the small lot sizes, replenishment lead time is
expected to be constant at two hours (0.2 days).
Find the minimum number of kanbans needed to
avoid shortages.
How would your solution change if kanbans were
collected once per day, and each part type was
produced once per day in a quantity equal to the
product of the container size and the number of

1.

ENVIROMENTAL REQUIREMENTS FOR 2

KANBAN
SYSTEMS
Because of limited information transfer, kanban 6
systems are not designed for all production
environment.

2.

If demand is fairly constant, then future demand of parts can

be predicted

3.

Information does not need to be sent in advance. Production

is schedule to replace parts withdrawn from buffer of work
centers.

4.

We set the number of kanbans whereby parts are replenished

just-in-time for the next time requirement.

5.

However, long term production planning is still required to

set the rate of production.

6.

Key environmental assumptions for kanban to operate

efficiently are given in next slide.

1.

io
n.
ENVIROMENTAL REQUIREMENTS FOR
2
KANBAN
SYSTEMS CONSTANT OVER A PLANNING
DEMAND
IS APPROXIMATELY
7

PERIOD: If supply of a certain part type increases or decreases

and once this problem is noticed, more kanbans of this part type
are added or subtracted, as the case may be.
2.

SMALL SET-UP TIMES:

Large set-up
times can lead to large inventories, as we need larger number of
kanbans; also increases the safety stock.
Kanban systems require small set-up times to
permit small production quantities and quick response to
demand rate changes.

3.

AVAILABLE, FLEXIBLE CAPACITY: Because inventory levels are

kept to the minimum and demand changes occur without
warning, we must be able to replace parts and make minor
adjustments to the relative production rates of the work centers
part type rapidly.
Machine breakdowns and quality
problems can also demand adjustments in production rate.

4.

io
ENVIROMENTAL REQUIREMENTS FOR n.
KANBANWORKFORCE:
SYSTEMS
DISCIPLINED
The kanban system presumes that2
the
workers report withdrawals and wait for loose kanbans before
8
producing. If a worker withdraws a part ( or a complete container)
without removing the kanban and requesting replenishment, then the
replenishment process will be delayed, and eventually parts shortage
will occur.
This will cause workers to loose confidence in the system, and will
begin to produce without.
Predictability and capability of the production process is important.
Otherwise, kanban systems fail to operate smoothly and efficiently.
The system should be able to able to respond to any request in a
timely manner.
This is achieved by limiting the range of production requests and
ensuring consistency in production rate.

1.

io
n.
AVERAGE INVENTORY LEVEL
2
The inventory in a kanban system takes two forms:
a) WIP in the form of parts passing through intermediate9work
stations in the cell, and the cell safety stock.

b)

The number of parts in the output buffer of the workstation.

2.

Inventory costs are associated with average inventory levels in

a kanban system.

3.

In a genuine just-in-time system with no randomness, we would

schedule our container replenishments to complete processing
and arrive at the output buffer just as the request for a container
of parts arrived from the successor work-center. In this case, the
output buffer would always be empty.

4.

WIP are created from the flow of each unit through the system
during processing. Although we can put bounds on this level of
WIP, but it is difficult to eliminate or reduce it beyond a certain
limit.

io
n.
3
DYNAMIC MANAGEMENT OF WIP LEVELS
0
1.

The number of kanbans that are active in the system

determines service and inventory levels.

2.

It is possible to use dynamic kanban control

strategy in production environment with seasonal
demand or make-to-order environment to
control the levels of inventory.

3.

These two cases are discussed in the next slides:


1.

io
n.
DYNAMIC MANAGEMENT OF WIP LEVELS
3
(cont. .)
1
Case of Seasonal Demand of an Item:
a)
b)

c)

d)

e)

Work center makes a variety of products

We know that for a given lead time the number of
kanbans needed is proportional to the items demand rate
(k=).
Thus if demand forecasts are available, number of
kanban can be adjusted over time to satisfy the
maximum inventory-lead time relationship.
In a fast changing situation, we should use the
demand forecast for a future period equal to the
expected lead time.
Thus, we will have a desired number of kanbans
based on the demand forecast for current + lead
time demand period

1.
f)

io
n.
DYNAMIC MANAGEMENT OF WIP LEVELS
(cont.
.)
Case
of Seasonal
Demand of an Item (cont. .): 3
2
At times, we may have extra kanbans and filled
containers in the system.

g)

If the number of kanbans in the system is greater than

the required number of kanbans, we remove that kanban
instead of returning it to the schedule board.

h)

When the number of kanbans in the system for a

particular part type drops below the desired number, we
simply enter more kanbans into the work center by
adding the required number to the collection bin.

i)

Adding these kanbans will automatically schedule

production as capacity becomes available.

io
n.
DYNAMIC MANAGEMENT OF WIP LEVELS
3
(cont. .)
3
2. Case of Dynamic Demand:
1.

Similar strategy can be used

2.

At any point in time, either with periodic or continuous

review, we adjust the number of kanbans in the system
to match the current demand rate.

3.

In implementing the above procedure, it is advisable to

use a safety factor that guards against the adjustment
in time as well as randomness in demand.

4.

Thus a safety factor, l, would usually be larger for than

for the constant demand case.

1.

io
n.
DEFINING THE SYSTEM CONTROL
POINTS
3
The
container size and the number of kanbans regulate the inventory
level at each stage of production system
4

2.

In some cases, the stages (work centers) are easily defined by

a natural set of production activities (if the components are
fabricated in one area and then stored, that forms a stage.)

3.

On the other hand, if part fabrication requires parts to visit several

geographically dispersed machining centers, with heat treatments
and inspections followed by painting, etc., defining stages of work
may not be easy. Here we might prefer to establish intermediate
control points.

4.

By adding control points, we can bifurcate work center into more

stages.

5.

The two stage approach adds a second control stage point. In

exchange for the extra WIP inventory point, we gain a reduction in
cycle time.
(A general depiction of one work center versus two work centers
is shown in the next slide.)

3
5

DEFINING THE SYSTEM CONTROL

POINTS
6.

A choice of control points and storage definition

depends on product variety, storage costs and
cycle time requirements.

7.

A common approach sets control points

immediately before the bottleneck operation and
also as far down the operation sequence as we an
go before the product differentiates into many
models.

8.

This allows storage of fewer in-progress

products but still allows rapid customization
to replenish demand for finished products.

io
n.
3
6

3
7

The end of this lecture