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Cantidad de or den Kanban (KOQ) frente FREE Guide: How

a cantidad de or den económica (EOQ): la Kanban
mejor fórmula par a establecer Replenishment
cantidades de r eabastecimient o
Process Works!
estándar.
FREE Kanban Guide
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⇒ The 4 Core Steps

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⇒ The 2 Most Vital
Kanban Formulas!
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Kanban Process!
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Kanban es una herramienta de reabastecimiento de inventario

justo a tiempo (JIT). Cuando se implementa correctamente,
Kanban utiliza la fórmula de cantidad de orden Kanban (KOQ)
para determinar cantidades de orden de inventario estándar.
Desafortunadamente, muchos gerentes de inventario de
fabricación de equipos ven a KOQ en desacuerdo con otra First Name
fórmula de cantidad de pedido estándar popular: Cantidad de
orden económica (EOQ).
Last Name
Cantidad de orden económica (EOQ)
Muchos administradores de inventario de nen cantidades de Position Title
reabastecimiento de piezas estándar utilizando el cálculo de
cantidad de orden económica (EOQ) simplemente porque están
Work Email
más familiarizadas con él. EOQ es uno de los modelos más
antiguos de programación de producción. Al considerar la
cantidad de demanda anual proyectada, el costo de realizar un
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pedido y el costo de mantenimiento o mantenimiento de las
partes, EOQ tiene como objetivo identi car el número óptimo
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de unidades que se deben comprar o fabricar, al tiempo que se
reduce el costo total tanto como sea posible .

EOQ = √ [(2 x Demanda de cantidad x Costos de compra) /

Costo de transporte]

Variables
EOQ El enfoque de EOQ en economizar, se re eja naturalmente
en las variables de la fórmula:
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Q = Quantity of annual units (i.e. annual demand) Subject
EOQ requires using a projected demand for the parts.
Unfortunately, even with the best analysis of trends, forecasting Lean Learning
the demand for an entire year is often unwieldy and unreliable.
Often, countless factors in uence demand and sabotage Class C Components
forecast accuracy. Even if projected demand is accurate, EOQ is
limited by its own assumptions. (in that it assumes there’s no Inventory
variation in the rate of demand over the projected period.) Management

P = Production or purchase cost (all handling and/or set-up Lead Time Reduction
costs per order)
The unit cost that is factored into EOQ strives to consider any Lean Manufacturing
expenses incurred to make a unit. Other than the cost of labor
Risk Mitigation
to assemble a product, it covers a variety of estimated
expenses. A few examples:
Supply Chain
Time spent on purchase orders
Vendor Managed
Delivery of raw material
Inventory (VMI)
Setting up work areas
Machinery set-up and maintenance for producing units.
News & Events
C = All carrying / holding costs per unit
The carrying cost refers to the yearly amount that it costs a
company to store (hold) inventory. This gure should account
for a number of costs necessary for managing inventory,
including:

Warehouse setup
Warehouse space
Refrigeration
Insurance

One of the most common mistakes many manufacturers make

in utilizing EOQ is underestimating holding costs.
Let’s consider an example:

Annual demand = 50,000 units, unit purchase price is $10.00,

order cost is $3.00, and carrying cost is 3% of the purchase
price ($0.30). EOQ equals 1,000 units.

EOQ = √[(2 x 50,000 x $3.00) / $0.30] = 1,000

If carrying cost really is 3% then great, but underestimating

carrying cost is the most common reason EOQ tends to result
in such high order quantities.

Consider what would happen if the carrying cost was actually

6%:

EOQ = √[(2 x 50,000 x $3.00) / $0.60] = 707.11

Underestimating carrying cost arti cially increases the resulting

order quantity. This is the most common reason kanban order
quantities (KOQs) tend to be lower then EOQs. The oversight is
due to the misconception that carrying cost should walk hand-
in-hand with the cost of money (i.e. prime plus).

Remember that in order for carrying cost to be valid it should

include:

Cost of money. This includes the cost of borrowing

money to purchase inventory as well as the lost interest
that would be earned on the money otherwise invested.
 It’s common to use the annual rate that would be paid on
a short-term loan to pay for inventory.
Cost of space. Remember to include bins, racking, and
attributed overhead. Also, keep in the mind that this
includes revenue lost due to a lack of work space
(because it’s used to store inventory).
Cost of material handling. This includes all costs related
to picking, sorting, and moving inventory around. Don’t
forget to include the forklift as well as the forklift
operator.
Cost of errors. Part obsolescence due to engineering
design changes are not uncommon for manufacturers to
incur. Also, it’s good to account for the cost of chasing
down misplaced inventory, including the cost of
production lines that go down due misplaced inventory
and stockouts.
Cost of inventory planning. Planning and controlling the
inventory is part of inventory’s carrying cost as well.
Remember to include the cost of cycle counting your
inventory. Be careful to include purchasing costs here
(EOQ accounts for them separately).

This list is far from exhaustive.

If you’re an inventory or supply chain manager and the above

seems like overkill then the odds are good that your rm is
currently underestimating carrying costs. Carrying costs can be
40% or more of the direct purchase value of the inventory, are
often between 20% and 30%, are unlikely to be less than 15%,
and nearly never less than 7%, even among world-class
manufacturers.

EOQ is based on a few assumptions it is vital to be aware of:

The rate of demand is constant.

Stock is replenished the instant it is depleted.
The purchase (or production) cost is xed.

Since the total annual purchase cost hypothetically increases

with each order (in turn increasing total annual costs), EOQ
seeks to keep the number of orders down. More items are
brought in at once to reduce costs. The unfortunate part is that
because EOQ makes the assumptions it does, overtime it can
tend to actually increase costs by overlooking waste hidden
throughout various inventory management processes.

Kanban Order Quantity (KOQ)

The lean just-in-time (JIT) alternative to EOQ is Kanban Order

Quantity (KOQ). Unlike EOQ, the KOQ formula varies slightly
depending on the speci c kanban replenishment method used
(empty-a-bin or break-a-bin).

Empty-a-Bin KOQ = (Actual Lead Time x Daily Demand +

Target Safety Stock Units) / (2 cards- 1)
Break-a-Bin KOQ = (Actual Lead Time x Daily Demand +
Target Safety Stock Units) / (2 cards)

An advantage of kanban order quantity is that it takes into

account the actual demand, only seeking to replenish what has
already been used, so it is exible over time and your facility is
only paying for what it actually needs.

Kanban is a Lean Just-In-Time (JIT) tool. Lean JIT seemingly

ignores ordering and holding costs by essentially setting the
smallest order size (rather than smallest order cost) possible
as a target. This does not necessarily contradict EOQ. Kanban
order quantity (KOQ) “ignores” ordering and holding costs
because lean doesn’t assume costs are xed. The central
purpose of lean manufacturing is to continuously reduce waste
(i.e. cost). Thus, lean continuously targets costs for
elimination. This is actually in spirit of EOQ. After all, when we
reduce ordering costs and on-hand inventory then EOQ shrinks
naturally.

Understandably, the primary criticism of KOQ, those familiar

with EOQ have is that KOQ requires a higher number of orders.
In order to avoid stocking out while still keeping the inventory
small, more orders and/or changeovers are needed than with
EOQ. Yet, by making frequent orders and keeping regular
contact with your suppliers, you have an opportunity to build
relationships and recognize common goals. This opens the
door for negotiations that work for both companies so that you
can not only further reduce purchase costs and lead times but
also keep inventory (and its carrying costs) low.

Summary
Both KOQ and EOQ can be effective solutions, but they provide
very different replenishment solutions. If KOQ is not something
that your company can do, keep in mind that kanban order
quantity and economic order quantity can be compatible. For
example, instead of assuming that the costs of purchase and
storage are xed, seek to improve quality and reduce them.
Kanban need not be at odds with total cost reduction.

July 2nd, 2018 | Categories: Inventory Management, Lean Manufacturing

About the Author: Aaron Lyles

Aaron is the Marketing Director at Falcon

Fastening Solutions, Inc. He is focused on sharing
Falcon's unique approach to fastening and class
C production component supply chain solutions
with equipment manufacturers.

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