One of the most important tasks of a kanban planning system is determining the optimal number of kanban cards. The kanban planning software takes care of this calculation provided you enter correct values for kanban size, average daily demand for the kanban item, and the lead time to replenish one kanban.

By default, the standard calculation is:

                                                      (C – 1) * S = D * A * (L + SSD)

where:

• C is the number of kanban cards
• S is the kanban size
• D is the average daily demand
• A is the allocation percent
• L is the lead time (in days) to replenish one kanban
• SSD is the Safety Stock Days

In addition to this basic formula, when the calculation program calculates kanban size, it takes into account the values for the following order modifiers (specified in the pull sequence), in the following order:

• Minimum Order Quantity
• Lot Multiplier

For example, suppose you’ve specified the Minimum Order Quantity for a particular item to be 50. You want the formula to calculate the kanban size (S), so you enter values for C and L. Even though strictly based on the values you enter for C and L the formula should yield 40, the actual kanban size will be 50 because of the Minimum Order Quantity. If a Lot Multiplier of 15 is specified, the kanban size is rounded to 60 in oder to meeth both the Minimum Order Quantity and Lot Multiplier order modifiers.
Note: The program uses order modifiers only when calculating the kanban size. If you specify the kanban size and want the
program to calculate the number of kanban cards, the program does not use order modifiers.

How the Program Determines Average Daily Demand

 

• It identifies all the kanban items that you want to include in your kanban calculation, using the parameters you enter when you launch a kanban calculation.
• It finds location information for each kanban item.
• For each kanban item, it identifies every BOM in which the item appears so that it can explode the demand from the assemblies down to the kanban item.
• Using the MDS, MPS, Actual Production, or forecast you specify in the Kanban Names window – it identifies all the demand entries for each kanban item for which the demand is independent. For example, suppose that from the forecast you specified in Kanban Names, the program finds independent demand for 600 of kanban item A.
• It uses the Allocation Percentage specified in the pull sequence for each kanban item to determine how to distribute demand for the item among its different locations. For example, if the allocation percentage for item A at location L1 is 20%, then the program places demand of 120 (that is, 20% of 600) at location L1.
• Using the MDS, MPS, Actual Production, or forecast you specify in the Kanban Names window – it calculates demand for each kanban item for which demand is dependent on the demand for other items. It does so by using the following information:

– Quantity per Assembly. For example, if there are 2 of kanban item R per one assembly of item K, and the demand for K is

• Finally, the program sums up the demand entries that fall within the kanban planning horizon for each kanban item at each location and divides the demand for each item at each location by the number of workdays. For example, if the number of workdays on the planning horizon is 20, then the average daily demand for item A at location L1 is 6 (because the total demand  for item A at location L1 for the planning horizon is 120). The program prorates the demand from periodic forecasts for those days between the Demand window specified for the calculation program.

Using the Kanban Calculation Program
Calculating the kanban size or the number of kanban cards involves two steps:

1. telling the application what demand information to use - we do that by specifying the kanban name in work bench as shown in above screenshot.
2. submitting a request for the calculation program. 

Viewing and Updating Kanban Calculations
You can view the recommended kanban size for each item at each location. You can compare plans and update parts of your production plan with your kanban simulation plan. You can also re–launch the kanban calculation program to see the effects of changing one or more variables, including kanban size, number of kanban cards, and source types.