This example depicts the actual flow of how Velaction produces our DVDs in a just-in-time manner. We make frequent improvements to our products, so do not want to carry a lot of inventory. Instead, we do in-house production of our DVDs.
With numerous titles for DVDs and other digital media, though, we could easily lose track of what we have on hand and have stock outs. To prevent that, we primarily use a two-bin kanban system. The basic principle is that one bin is somewhere in the production cycle and one bin is on the shelf at any given time.
The quantities are set based upon demand during the production process. To keep inventory down, you want the new bin to arrive just as the first one is getting low. Because of uncertainty in demand and production, though, most people use some safety stock. This additional bit of product can absorb that variation and prevent stock outs.
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