Imagine comparing a manufacturing operation using regular lot-sizing and the same operation with a Kanban/lean production approach.What would be your expectations of the difference between the total cost (i.e., inventory holding costs + setup/ordering costs) of each?
A)Inventory holding cost will increase non-linearly with inventory
B)Total costs will be lower for the regular lot-size operation
C)Total costs will be lower for the Kanban/lean production operation
D)The order quantity will be larger for the Kanban/lean production approach
E)As long as the total quantity is the same, total costs will be the same

Question

Quizplus · Accepted Answer

Kanban/lean production approach emphasizes on reducing inventory holding cost by producing and delivering goods just in time. This reduces inventory holding cost, and hence the total cost of the operation. Therefore, the total cost will be lower for the Kanban/lean production operation than the regular lot-size operation.

Imagine Comparing a Manufacturing Operation Using Regular Lot-Sizing and the Same