I had some difficulty getting this to work, after success it is now time for "lessons learned".

Introduction

When using fixed Kanbans an important question is: how do I determine the appropriate number of Kanban cards or "the Kanban level".

A standard formula for this can be found easily on the internet, but this formula is nothing special. In order to not run short, I need to "produce" or "complete" Kanbans in accordance with the demand! Pretty basic!

If I know my demand (for fixed Kanbans that is likely to be a forecast) and I know my lead time, I know how big of a quantity I need to produce or transfer (or wittdraw) in order to satisfy that demand.

The only other thing needed is the size of my Kanban handling unit and voila there is my "level" or number of cards. In order to avoid an outcome of zero, the formula typically adds a quantity of 1 so I always get at least 1 card.

Kanban quantity calculation policy

In Dynamics AX 2012, the formula is stored in the "calculation policy", see above.

The user can modify the formula somewhat by adding safety factor, safety stock but the formula remains essentially the same.

Two important remarks
(1) The Master plan mentioned in the policy is where the system is going to look to find the demand. It is NOT going to take the demand forecast quantities but the quantities of the planned orders. And this is right. If there is on-hand, the planned order quantities will be lower then the demand forecast. But it is a tiny hurdle in the brain to accept that the `forecasted demand quantity´is determined by looking at the quantities of planned orders. We have to agree with the designers however. I only need supply for the `net demand´, not the ´gross´.!

(2) The Period "days ahead" in this policy is in calendar days. The system has to calculate average daily demand by dividing the total quantity of planned orders in the time period of 300 calendar days by the number of working days!

EXAMPLE: I have monthly forecasts for the coming year that total to 50,000 EA. If my days ahead = 300, the system will NOT divide by 300 days but by the number of working days in that time period. (300 days is about 10 months, so that would be about 200 days, precise number depends on where you are in the year when you run this calculation)

The policy mentioned above has to be linked to the Kanban rule if we want this functionality. (of course it is entirely optional to let the system calculate the number of Kanban cards)

FInd the lead time in the Kanban rule

In the details of the Kanban rule I find the lead time that will be used in the formula.(in days)

Kanban quantity calculation

This is the screen where the calculation is run.

These are the steps
(1) Create a new entry, give it a name and select the policy you want to use. Click in the date fields and they will populate automatically based on the period definition(s) in the policy.

(2) Click "add" to select a Kanban rule manually. Item number will pop in. But you avoid the "add" entirely and just click `Generate' and the system will find all Kanban rules that have the same calculation policy.

(3) Generate will pull in all existing Kanban rules that have the same calculation policy. Product quantity (= the Kanban handling unit quantity) and the Kanban quantity (number of Kanban cards or level) will be populated. The numbers you see are the current numbers. In our scenario, the system will calculate a new Kanban quantity based on a forecast.

(4) CLick "Calculate". This is the actual calculation. it will check Master Plan 10, find all the planned orders there and calculate a grand total of the quantities over the 300 calendar days. The system will now divide by the number of working days in that period of 300 days. This number will show in the field "Demand". Then the system multiplies this demand with the lead time in the Kanban rule, then divides the result by the Product quantity (the handling unit quantity) to result in the Kanban quantity (rounded). The calculation is done for all Kanban rules that are showing in the screen.

(5) Click 'Update". This will transfer this new number of Kanban cards to the field "Kanban quantity" in the Kanban rule.

This is where the process stops. But we are not finished.

It is now up to the user to actually increase or reduce the number of cards for the fixed Kanban.

TWO LESSONS LEARNED

(1) Make sure the output warehouse of your work cell is the same as the warehouse that shows in your forecast (or safety stock) (for withdrawal Kanbans, the destination warehouse has to be the same warehouse that we see in the forecast)

(2) Realize that the system is not using the number of days mentioned in the period but the number of working days in that time period.

With that you will have success and will have no problem verifying the number the system generates.

NOTE. A new feature in Lean Manufacturing 2012 is to calculate the number of cards based on historic, "fulfilled" demand. This will be shown in a next blog.