In Chapter 3 you gathered data on your process in preparation for this point. In this chapter we will use the data from Chapter 3 to "size the kanban." Or, in layman's terms, you will determine how many containers of each product you will require to effectively operate the kanban (and keep your customer supplied). Figure 4-1 expands the model started in Figure 3-1 by adding this step.

Figure 4-1: Calculating the Kanban Quantities.

Once you start kanban scheduling, these quantities become the maximum amount of inventory held. Therefore, when all these containers are full, then you stop production. This rule is one of the major tenets of kanban scheduling you only produce when you have signals.

These quantities become the scheduling signals. To set up these signals, we will determine the emergency level (or red level), the schedule signal (or yellow level), and the normal level (or green level). In Chapter 5 you will develop a kanban design, which uses these signals to control the production schedule.

In this chapter we propose two methods for sizing internal kanbans. The first method calculates the container quantities based on the data collected in Chapter 3. This method allows you to optimize and potentially reduce the quantities based on the characteristics of your process.

The second method uses your existing production schedule and makes the current production quantities the kanban quantities. This method allows for quicker implementation and less math, but does not offer the potential for reducing inventory levels.

We will...