International Journal of Production Research, 2013

Vol. 51, No. 10, 29973017, http://dx.doi.org/10.1080/00207543.2012.751516

Kanban number optimisation in a supermarket warehouse feeding a mixed-model assembly

system
Maurizio Faccio*, Mauro Gamberi and Alessandro Persona
Department of Management and Engineering, University of Padua, Stradella, San Nicola 3, 36100 Vicenza, Italy
(Received 10 May 2012; nal version received 8 November 2012)
Following just-in-time principles, a growing number of manufacturers are adopting the so-called supermarket concept.
Supermarkets are decentralised storage areas scattered throughout the shopoor that serve as an intermediate store for
parts required by nearby assembly lines. From these stores, a certain number of handling operators deliver parts from the
supermarket to, and collect empty bins from, assembly stations. Finally, they return to the supermarket and are relled
for their next tours. The assembly stations are typically relled from the supermarket through the constant replacement
of the consumed parts pulled by the kanban system. Considering a mixed model assembly system composed of different
assembly lines, feeding problems can occur as an effect of the replenishment lead time, of the production mix variation,
of the commonality between the different models assembled. The aims of this paper are (i) to highlight how the supermarket/multi-mixed assembly-line system presents specic attributes that prohibit the simple application of well-known
kanban dimensioning formulations and (ii) to provide an innovative procedure to optimally set all decision variables
related to such a feeding system.
Keywords: feeding; assembly lines; supermarket; kanban.

1. Introduction
High-volume production systems have traditionally been implemented as ow lines to benet from economies of scale
and productivity gains. In order to compete in a global market, nowadays companies need to offer a wide range of
different products. In this case, a possible approach is to congure the production system as a multiple mixed-model
assembly-line system, where each assembly line is capable of producing a great number of variants of a common base
product, while the base product is different from one assembly line to another. This conguration can maintain for each
assembly line negligible set-up times and costs (one lot size) with a high differentiation in the nal products.
One signicant challenge within this context is the parts feeding to the productive units (assembly line stations)
(Emde and Boysen 2012a). A reliable and exible parts supply is indispensable, because otherwise material shortages
leading to line stoppages and hundreds of assembly workers being idle threaten. By contrast, enlarged safety stocks near
the line impede the assembly process within the scarce space of stations (Emde and Boysen 2012b) and increase
inventory costs.
Following just-in-time (JIT) principles, a growing number of manufacturers are therefore adopting the so-called
supermarket concept. Supermarkets are decentralised storage areas scattered throughout the shopoor that serve as an
intermediate store for parts required by nearby assembly lines. From these stores, handling operators, sometimes using
small towing vehicles connected to a handful of wagons (tow trains), deliver parts stored in appropriate containers from
the supermarket to, and collect empty containers from, assembly stations. Typically, this delivery is made according to a
xed schedule and routes for each operator, who serves a certain part of the system (i.e. a certain set of assembly
stations). At the end, handling operators return to the supermarket for relling for their next tour. In this way, decentralised supermarkets can deliver frequent and small lots of parts, so that inventory at the lines is reduced, and long-distance deliveries from a central receiving store are avoided.
In these kinds of warehouses, handling operations usually have to be ergonomic and fast. For these reasons, many
use special storage equipment such as gravity shelves and modular pipes. The containers used to stock and move parts
from the supermarket to the assembly lines are also typically standardised and optimised in line with the parts typology.
Several examples of the supermarket concept applied in different industrial contexts are reported in Figure 1.
*Corresponding author. Email: maurizio.faccio@unipd.it
2013 Taylor & Francis

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Figure 1. Examples of the supermarket concept in different assembly systems.

In a JIT environment, every container is normally associated with a kanban card, a plastic card containing all the
information required for the production/supply of the parts of a product at each stage. These cards are used to control
production ow and inventory (Sendil Kumar and Panneerselvam 2007). The assembly stations in such a supermarket/
multiple mixed-model assembly-line system are relled through the constant replacement of the consumed parts pulled
by the kanban system. The level of inventory for each part at each assembly station is related to the kanban number n.
If the value of n increases, the stock of the parts among the assembly lines also increases. As a result, idle stock occurs.
Similarly, if the value of n decreases, the stock of parts also decreases, and shortages occur. There is an immense kanban literature, but it seems that most kanban implementations set these parameters by rules of thumb or simple formulas
(Bonvik, Couch, and Gershwin 1997). An example of such a formula is the well-known Toyotas formula,
n
D  L  1 @=a, where n is the number of kanban, D is the consumption rate, L is the replenishment lead time, a
is the stock-keeping unit (SKU) capacity, and is the positive safety factor (Sugimori et al. 1977).
Considering the supermarket/multiple mixed-model line assembly system feeding process, this formulation can
sometimes be unable to bring about substantial results, especially from a cost point of view. In fact, the parameters used
are functions of other decision variables or other parameters. For example, while in a vendor/buyer system, the replenishment lead time L is (almost) xed; in the supermarket/multiple mixed-model line assembly system, this parameter is
a function of the handling operators involved. The safety factor (i.e. the safety stock) is related to the replenishment
lead time, the consumption variability, and the service level imposed. The consumption rate for each part in each assembly line D is a function of the line throughput and of the production mix variation (Song, Candace Arai Yano, and
Panupol Lerssrisuriya 2000) and in a mixed-model assembly line, of the commonality between different models (Battini
et al. 2010). The container capacity a is a function of the shape/weight of parts and of the stocking/handling tools.
All these decision variables have to be correctly set, and all parameters have to be studied and managed. For this
reason, this paper proposes an innovative integrated kanban number optimisation procedure for a supermarket warehouse
feeding a multiple mixed-model assembly-line system. Using this procedure, operation managers will be able not only to
decide on the optimal number of kanban for each part in each assembly line, but also to dene, through an integrated
approach, the other decision variables related to the safety stock level for each part in each assembly line, the service level
to use, the number of handling operators for the feeding, and the optimal supply lead time. To increase the utilisation of
supermarket warehouses and integrate the JIT philosophy, the presented paper thus makes an important contribution to the
operation-management literature.
The remainder of the paper is organised as follows. Section 2 reports the literature review on the supermarket concept
and on the kanban number optimisation. Section 3 describes the problem formulation and the proposed cost model, while
Section 4 presents an applicative case and the procedure application. Section 5 analyses the bill of materials inuence in
the optimal setting of the decision variables, while conclusions are drawn in Section 6.
2. Literature review
This paper deals with two main topics in the operations management literature: the kanban system optimisation and the
supermarket concept. While there are a huge number of contributions about the rst topic, the second research topic is
relatively young, and few papers are available. The benets of using the kanban system have enabled in recent decades
the rapid and increasing adoption of this production control system. These benets can be briey summarised as (Sugimori et al. 1977):

Reduction of cost-processing information. Implementing a system that provides a production schedule to all
processes and suppliers as well as makes alterations and adjustments by real time control is costly.

International Journal of Production Research

Rapid and precise acquisition of facts. Using kanban, the managers of workshops may perceive such continuously
changing facts as production capacity, operating rate, and manpower without the help of a computer. Hence, data
on schedules corresponding to the change are accurate and urge workshops to found responsibility systems and to
promote activities for spontaneous improvements.
Limiting surplus capacity of preceding shops. Since the automotive industry consists of multistage processes, generally the demand for the item (the part) becomes progressively more erratic the further the process point progresses.

For these reasons, research has been carried out to nd the optimum number of kanban by adopting
methodologies and tools such as simulation, queuing models, mathematical models, heuristic models and the
intelligent approach. Contributions can also be classied by their objectives and the considered production
ments. From the objectives point of view, different aims are pursued in this problem, and the most frequently
the (Sendil Kumar and Panneerselvam 2007):

2999

different
articial
environused are

Maximisation of average cumulative throughput rate (the ratio of total satised demand to total generated
demand) (Vito, Dassisti, and Okogbaa 1995; Yavuz and Satir 1995);
Minimisation of average production lead time (the amount of time spent by a job from entering the system until
the completion of all operations) (Sharadapriyadarshini and Rajendran 1997; Jing-wen-Li 2003);
Minimisation of average work in progress (the mean of all in-process inventory levels for the products) (Chan
2001; Shahabudeen, Krishniah, and Narayanan Thulasin 2003).

Other objectives such as the maximisation of line utilisation or minimisation of set-up time are also used.
Kanban number optimisation through the minimisation of total cost function is another possible approach; this is the
objective considered in the present paper. Sarker and Balan (1999) studied a multi-stage kanban system for short lifecycle products in the market. A cost function was developed based on the costs incurred for the raw materials, for the
work in progress and for the nished goods. Ohno, Nakashima, and Kojima (1995) proposed an algorithm to determine
the optimal number of kanban for each of the two kinds of kanban (production ordering and supplier kanban) under
stochastic demand, thus minimising the expected average cost per period. Salameh and Ghattas (2001) proposed a cost
analysis using a trade-off between holding cost and shortage cost.
From a production-system-environment point of view, it is possible to nd different contributions on the kanban system
optimisation problem in ow-shop production systems, assembly-line production systems and batch production systems
(Gerchak, Yunzeng Wang, and Candace Yano 1994). Obviously, as the presented paper topic, the kanban system is widely
implemented in the repetitive manufacturing environment (Sendil Kumar and Panneerselvam 2007; Battini et al. 2009b).
Aghajani, Keramati, and Javadi (2012) studied the cellular manufacturing system controlled by a kanban mechanism,
proposing a mixed-integer nonlinear programming model in order to determine the number of kanban, batch size, and
number of batches using the minimisation of the total cost function. Azadeh, Ebrahimipour, and Bavar (2010) presented
a hybrid approach as an optimisation search technique and a simulation model to improve an existing JIT automotive
industry production line system. Considering assembly-line systems, many contributions refer to the sequencing problem
solution. Xiaobo and Ohno (1997) considered the mixed-model assembly-line sequencing problem and proposed a
branch-and-bound approach in order to minimise total conveyor stoppage time. Drexl and Kimms (2001) introduced an
assembly line sequencing mixed-model combinatorial approach for small problems. Battini et al. (2009a) proposed a
linear programming model in order to minimise the buffer dimension, thereby optimising the models sequencing for a
mixed-model single line assembly system. Azzi et al. (2012a) introduced a linear sequencing model for workload
levelling in the case of multiple mixed-model assembly-line systems with feeder lines, where the balancing problem
strongly also inuences the parts consumption rate (Azzi et al. 2012b).
From the literature review of kanban number optimisation problems, as well as considering the scope of the present
paper (i.e. multiple mixed-model assembly lines served by a supermarket warehouse) and looking at the recent survey
by Sendil Kumar and Panneerselvam (2007) on the JIT-kanban system, it is clear that the kanban number optimisation
problem in such a production environment has not been studied to any great degree.
The supermarket concept, as highlighted in Section 1, is a relatively young research topic, and thus further research
is certainly necessary. According to Emde and Boysen (2012b), it is possible to classify these contributions according to
time frame (from long-term strategic to short-term operational), as follows:
(1) Location planning, i.e. determining the number/locations of supermarkets, what parts each one has to manage
and their assignation to the assembly lines (Battini et al. 2010; Emde and Boysen 2012a).

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(2) Handling operators routing, i.e. deciding on the number of handling operators (equal if used by the number of
tow trains guided by handling operators) assigned to the supermarket and assembly stations served per operator,
and where a route starts and ends in the supermarket (Choi and Lee 2002; Golz et al. 2011; Emde and Boysen
2012b).
(3) Handling operators scheduling, i.e. for any given handling operator and their associated route, optimising the
point in time for each stopover on any tour along a route (Choi and Lee 2002; Golz et al. 2011; Emde and
Boysen 2012b).
(4) Loading, i.e. agreeing on the number and types of a parts SKUs to be loaded per tour (Choi and Lee 2002; Golz
et al. 2011; Emde, Fliedner, and Boysen 2012). This means deciding for each part for each assembly station of
each assembly line the number of parts to manage, or in other words in a JIT pull system for a given SKU
capacity, the number of kanban. In this situation, the objective is to optimise the parts level at each assembly
station, thus minimising the inventory level but avoiding part stock-outs.
The proposed paper conceptually covers the supermarket concept for points 2 and 4, considering the typical materials-management tool used in the JIT environment, namely the kanban system. It thus aims to cover the gap in the scientic literature in the case of a supermarket warehouse feeding a multiple mixed-model assembly-line system. It does so
by proposing an innovative integrated kanban number optimisation procedure that, thanks to the minimisation of the
total cost function, is able to optimally set different variables of the problem. This includes the number of handling
operators to use, which assembly stations to serve, the inventory level to set close to each assembly station for each part
for its kanban number and the service level to guarantee at the assembly station to ensure safety stock.
3. Problem formulation and kanban cost model
The main objective of the proposed procedure is to provide operation managers with a valid methodology for solving
the kanban number optimisation problem in the case of a supermarket warehouse feeding a multiple mixed-model
assembly-line system. As explained in the cost function section, the proposed procedure is based on the minimisation
of the total cost function composed of inventory costs, handling costs, and stock-out costs. Thanks to the proposed
integrated approach, the procedure is able to optimally set, together with the kanban number for each part, different
variables in the system. These variables include the number of handling operators to use for the feeding between the
supermarket and the assembly station, the service level (and the safety stock) for each part, and the average lead time
between the two feeding systems.
3.1. Assumption
In order to formulate the problem, the following assumptions are introduced:

The considered system is composed of a supermarket feeding the assembly stations of a certain number of
assembly lines.
Each assembly line l is a mixed-model assembly line that is capable of producing a great number of variants of
a common base product, while the base product is different from one assembly line to another. For this reason,
a certain model m is produced on just one assembly line l. Therefore, there is a univocal correspondence
between model m and assembly line l.
Set-up times are negligible as an effect of the assembled models commonality and of the exibility of manual
operators.
The JIT environment imposes a levelled production. For this reason, the total daily throughput of each line l,
Ql is considered to be constant, while the production mix can be variable according to a certain range. The
average tack time of the assembly line l is considered to be constant and equal to 1 / Ql.
The mix variation of a certain assembly line is considered to have a normal distribution, i.e. the daily historical
demand for model m on line l has a normal distribution. As a consequence, the pattern of the consumption of
the parts for each assembly station is assumed to have a normal distribution and be a function of the bill of
materials for each model and model demand.
A certain part i cannot be used in more than one station for each line l. For this reason, once part i and an
assembly line s have been dened, the assembly station where i is used is also dened. Part i can be used in
different assembly lines l.

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The SKU of part i is the same in every part of the system. Therefore, SKU capacity is a function only of the
part. Every SKU is associated with a kanban card.
The service level of part i in an assembly line l, LSi,l, is a system variable. The service level of an assembly
line isQcalculated by considering independently each service level of each part used on the line as
LSl i LSi;l .
The proposed approach considers only the delivered parts from the supermarket to the assembly stations. For
this reason, the considered stocks are only the operational stocks at the assembly stations managed through the
kanban system to optimise. The stocks levels at the supermarkets are also functions of the ows from internal/
external suppliers to the supermarket and depend on different factors such as the suppliers lead times (in case
of purchased parts) or the production lead times (in case of internal produced parts). Consequently, the considered inventory costs are only at the assembly stations. The operational inventory level is thus a direct function
of the kanban number in the system. The considered supermarket service level is 100%.
The workload for handling operators is considered to be equally distributed between them. For this reason, once
the number of handling operators has been dened, the parts consumption rate, SKU capacity, and average
expected supply lead time for each part i are considered to be the same.

3.2. Notations
In order to describe the procedure, the following notations are introduced:
M
I
BOMi,m
SKUi
dm,l
cm
Ql
Q
m,l
CVm,l
Nop
Vrun
Lrun
Trun
[minutes];
Tw
Tsi
TL/Ui
LSi,l
ki,l
kanbani,l
di,l
di
ci
hi

set of all products realised in the system, m=1,., M;

set of parts necessary for the same system; i=1,., I;
bill of materials of part i related to model m [parts/product];
SKU capacity is the size of the container of parts i, [parts/kanban];
daily expected average model demand for model m on line l, [products/day];
model value [e/product]
P
levelled daily throughput for assembly line l, Ql P
m dm;l [products/day];
levelled daily throughput for the whole system, Q l Ql [products/day];
standard deviation for model m on line l, [products/day];
coefcient of variation of model m on line l, CVm;l % rm;l =dm;l [%];
number of handling operators in the system [operators];
average speed during the route of the handling operator [metre/minute];
total length of the route in order to rell all assembly stations of the system starting and ending at the
supermarket [metres];
average run time to cover the total length L,Trun Lrun =Vrun
daily working time [minutes/day];
specic SKUi time for load/unload operations at the supermarket [minutes/SKU];
specic SKUi time for load/unload operations on the assembly lines [minutes/SKU];
service level for part i in assembly line l [adimensional];
security factor for part i in assembly line l; this refers to the service level LSi,l considering a normal
distribution pattern of consumption [adimensional];
number of kanban for part i on line l;
P
expected daily average demand for part i on linePl, di;l m BOMi;m  dm;l [parts/day];
expected daily average demand for part i, di l di;l [parts/day];
part value for part i [e/part]
inventory holding cost index for part i [%].

These parameters can be a function of external technical/economic factors (market attributes, products attributes, technical equipment attributes, production layout, parts attributes) or the decision variables as claried in the following sections.
3.3. Parts standard deviation in a JIT levelled production system
The parts consumption variation for a given assembly station is a function of the bill of materials of the model
assembled BOMi,m and of the production mix variation. While the production mix can be variable according to a
certain range, the daily production volume for each line is considered to be levelled (Ql is constant) as is typical of a
JIT environment.

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In this situation, it is clear how, for a given assembly line l, the demand of each model is correlated. For example, if
we consider just two models A and B on a certain assembly line, demands dA,l and dB,l are negatively correlated, when
the former increases and the latter decreases. In this case, the coefcient of correlation is = 1. The parts standard
deviation, derived from the bill of materials and the standard deviation of the model demand, can be easily derived from
the adaptation of the Das and Tyagi (1999) formulation by considering the relation between the model demand and parts
demand (1):
ri;l

r
X
XX
2

BOMi;m  rm;l
2q  BOMi;m rm;l  BOMi;m rm;z
m

z[m

Since, in a levelled production JIT environment, the variation in a model production quantity inuences the production quantity of other models, we assume that for a given number Ml of models assembled in a certain assembly line l,
the coefcient of correlation is negative and equal to = 1 / (Ml 1) equal for all models.
3.4. Handling operators turns/day estimation (supply lead-time estimation)
The problem of estimating the handling operators turns/day has different elements that make it difcult to solve using a
perfect analytical approach as a consequence of the dynamic nature of the problem. These elements principally are:

The number and types of SKUi to be loaded per tour are functions of the tow train capacity and parts loaded,
which changes on every turn.
The load/unload time at the assembly station and at the supermarket is a function of the kanban collected and
of the SKUi part type. Further, the number of kanban collected for every turn continuously changes.
One possible approach is to consider an average daily situation in which the kanban collected is a function of
the expected average model demand on assembly line dm,l. This approach is useful in order to simplify the
problem but introduces an error in the handling operators turns/day estimation problem. Thus:
By considering a levelled daily production (Ql is constant) and a normally distributed daily model demand, it
is correct to expect a daily production of dm,l, at its average value.
The variation in the daily collected kanban number is considered to be a function of the parts consumption
standard deviation as reported in Equation (1). The standard deviation inuences the turns/day estimation
because, as highlighted in the following sections, it inuences the safety stock level and, through total cost
minimisation, the expected average supply lead time.

By considering the expected average model demand, it is possible to write:

dKi;l di;l =SKUi

kanban=day

where dKi,l is the expected daily average kanban demand for a part i on line l;
TL=U

XX

dKi;l  TL=Ui

minutes=day

Average estimated time spent on the load/unload operation on the assembly lines.
TS

XX
l

dKi;l  Tsi minutes=day

Average estimated time spent on the load/unload operation at the supermarket.

The estimated turns/day (and as a consequence the average parts supply lead time) is:
Round=dayNop

Tw  g  Nop  TL=U TS
Trun  k

rounds=day

where Nop is the number of operators, is the operators efciency (0 < 6 1), and Tw is the daily working time in
minutes. is the capacity factor (1 6 6 ), where is equal to the number of trips that are averagely necessary for a

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tow train to complete one kanban delivery mission ( is equal to 1 if the tow train has a capacity greater than that
necessary and equal to 2 if there are averagely necessary two trips, etc.).
By considering that the workload for the handling operators is equally distributed between them, the average
expected supply lead time is equal for all considered parts and thus can be calculated as:
LT

Tw
Round=day

minutes

3.5. Cost function

The proposed kanban number optimisation procedure is based on the minimisation of the total cost function (7)
composed of:

Inventory costs on the assembly lines, related to the safety stock level and kanban number;
Handling costs, related to the number of operators employed in the feeding process and on all handling activities
(unload/load, transportation, kitting, etc.);
Stock-out costs related to the stock-out risk:
Ctot Cin Ch Cso

where Ctot denotes the total costs for the considered period (i.e. year), Cin denotes the inventory costs for the considered
period, Ch denotes the handling costs for operators for the considered period, and Cso denotes the stock-out costs for the
considered period.
It is important to highlight how:

These three cost types are a function of the parameters dened before.
There are many relations and trade-offs between these costs as is evident by the following formulations. This
implies using an integrated approach in order to optimally manage such a supermarket/multiple mixed-model
line assembly system.
In the management system phase, many of the parameters dened before can be assumed to be xed and
dened in the previous system design phase (such as the set of products, production layout, parts typology, and
dimension). By contrast, some parameters can be set as decision variables that directly inuence the other system parameters.

As claried by the following formulations, the decision variables in the management phase principally are:

Nop
LSi,l

number of handling operators in the system [operators];

service level for part i on assembly line l [%].

SKUi can also be a management decision, but the types and kinds of SKUs are often inuenced by the attributes of
the suppliers of parts and can be assumed to be a xed parameter function of the part. Other variables such as average
supply lead time LTi,j, kanban number kanbani,l, and safety stock SSi,l. are univocally dened once the values of the
decision variables Nop and LSi,l have been dened. Figure 2 shows the ow chart of the proposed kanban number optimisation procedure for a supermarket feeding a multiple mixed-model assembly-line system.
3.5.1. Handling costs

Ch Nop  C1op

!=period

where Ch is the total handling operator costs for the considered period, Nop is the considered number of handling operators in the system and C1op is the cost for one operator in the considered period.

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Figure 2. Flow chart of the proposed kanban number optimisation procedure for a supermarket feeding a multiple mixed-model
assembly-line system.

The assumption made is that the handling equipment costs are negligible. This assumption is correct in the case of
assembly where the parts dimension, weight, shape, etc. are not critical and the parts moving can be make using simple
and cheap equipment. On the other hand, in the case of industrial sectors where the parts feeding is very complex for
parts dimension, weight, shape, etc. (i.e. car assembly) special and expensive equipment is needed (Golz et al. 2011),
and the handling equipment costs have to be considered in the cost function (8).
3.5.2. Inventory costs

Cin

XX
l

kanbani;l  ci  hi  !=period

where ci is the value of the part. The inventory holding cost hi generally varies from 25% to 55% of the parts value
based on factors such as the cost of money, taxes, insurance, warehouses expenses, occupied space, and inventory
control (Richardson 1995). By contrast, as highlighted by Emde and Boysen (2012b), enlarged stocks near the line
impede the assembly process within the scarce space of stations. Therefore, in this case, it can be possible to consider
hi values greater than 55%.
The kanbani,l are calculated using Toyotas formulation, where the decision variables Nop (number of handling
operators in the system) and LSi,l (service level for part i on assembly line l) are derived from the total cost minimisation procedure.
kanbani;l

di;l  LT SSi;l
SKUi

kanban

10

SSi,l is the safety stock on line l for part i and are calculated using Persona et al.s (2007) formulation:
SSi;l ki;l 

p
LT  ri;l

parts

11

where:

ki,l is the security factor for part i on line l related to the service level LSi,l according to the normal distribution
assumption of the part demand;
LT is the supply lead time calculated as in Equation (7) expressed in days according the daily working time
Tw;
i,l is the parts standard deviation calculated as in Equation (2) [parts/day].

3.5.3. Stock-out costs

Stock-out costs occur because of the loss of production caused by the stock-out of at least one of the parts of the bill of
materials. They are calculated as:

Cso

XX
l

International Journal of Production Research

dm;l  cm  1  pm  LT =2  1 

LSi;l  dm;l  D!=period

3005

12

iem

where the rst part of the formula between the square brackets represents the specic stock-out costs of model m on line
l, while the second part of the formula between the square brackets represents the estimated stock-out number in the
considered period for model m on line l, with:

D as the working days considered in the period [day/period];

LT/2 as the average expected waiting time to rell the missing parts that are creating stock-outs from the supermarket
Qto the assembly lines, expressed in days (according to the daily working time Tw);
1  iem LSi;l as the stock-out risk for model m considering all parts i of model m according to its bill of
materials [%].
P
pm

BOMi;m  ci
%
cm

13

pm represents the incidence of raw materials on the product value cm. cm(1 pm) is the unitary contribution margin for
product m and represents the unitary loss cost in the case of stock-outs.
Figure 3 shows the cost trends for total costs and for additional costs based on the number of operators (x-axis) and
different service levels (colours). It is clear how the cost function has a minimum for the trade-off between the decision
variables.
4. Applicative case
The case company is a worldwide motorcycle manufacturer that produces a wide variety of products in an assembly-toorder environment. Its 12 models of motorcycles are produced on four assembly lines fed by a unique supermarket. The
daily working time is Tw = 8 h (480 min) and the considered period for the total cost calculation is one year with a

Figure 3. Cost trends as a function of the number of operators (x-axis) for different service levels (colours) (available in colour online).

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working time D = 200 days. Figure 4 shows the case companys supermarket/multiple mixed-model assembly-line
system.
The company is adopting the pull kanban system in order to rell assembly stations from the supermarket. Every
SKU is associated with a kanban card that pulls the material from the supermarket to each assembly line l for each part
i. The kanban number was rst dened by the production managers using the Toyota formulation based on the decision
variables. The proposed procedure was then implemented and the decision variables optimally set. At the end, the new
results obtained were compared with the performances of the old production system.
Table 1 reports the daily production data dm,l on each model for each assembly line and each model value cm. The
average tack time of each line can be derived as tack time = 1 / Ql where Q = 75 models/day, and the average system
tack time is one model every 6.4 min. The daily throughput Ql is considered to be xed (levelled production). The

Figure 4. Case companys supermarket/multiple mixed-model assembly-line system.

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Table 1. Daily production and model value.

Line

m1

m2

m3

m4

m5

m6

m7

m8

m9

m10

m11

m12

Ql

L1
L2
L3
L4
Cm

4
0
0
0
6500

10
0
0
0
7500

6
0
0
0
6000

0
6
0
0
6200

0
4
0
0
7000

0
5
0
0
7600

0
0
9
0
8000

0
0
3
0
8200

0
0
4
0
7200

0
0
0
6
7000

0
0
0
10
9000

0
0
0
8
8200

20
15
16
24
75

historical data show that the coefcient of variation for all models is almost the same, and thus CVm,l is considered the
same for all models, namely equal to CV = 30%.
The bill of materials of each model is reported in Table 2, while the parts attributes such as SKU capacity SKUi and
part value Ci are reported in Table 3.
Assembly lines are relled using tow trains, one for each handling operator. Thus, their capacity in much greater than
necessary ( = 1). The handling operator efciency from the historical data is = 75%. The total length of the route Lrun
(as indicated in Figure 2) is 1000 m, and the average speed Vrun, considering queues, curves, etc., is 0.5 m/s. The load/
unload times on the assembly line TL/Ui and at the supermarket TSi are considered to be equal for all parts, namely 1
min/SKU. The average raw materials incidence is pm = 40% for all models. In order to simplify the problem the service
level, LSi,l was chosen to be equal to LS for all parts and assembly lines. The cost for each handling operator is
C1op = e26,000/year.
The inventory holding cost hi was chosen to be equal to 65%. Its high value is motivated by Emde and Boysen
(2012b), because enlarged stocks near the line impede the assembly process within the scarce space of stations. In the
specic production environment object of the present study, the inventory holding cost also has to take into account,
beyond other classical factors, problems caused to the assembly process.
The case company uses four handling operators for the assembly lines, feeding an average service level of K = 3.5
(LS = 99.97%) and an average supply lead time of LT = 51 min with a total kanban number of 357 kanban.
An innovative procedure was implemented and the Ctot function minimised, giving as the output the optimal
decision variables setting as:

Nop = 5 handling operators;

K = 4.5 (LS = 99.999).

Table 2. Bill of materials.

Parts

m1

m2

m3

m4

m5

m6

m7

m8

m9

m10

m11

m12

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1
0
1
0
2
0
1
1
6
1
0
1
1
0
2
6
4
4
35
50

1
0
0
1
0
2
2
0
6
1
0
2
0
0
2
8
4
6
25
30

1
0
1
0
2
2
0
2
4
0
1
0
2
0
2
4
4
8
20
40

1
0
1
0
2
0
1
1
0
1
0
1
1
1
0
8
4
4
30
60

1
0
1
0
2
0
2
0
2
0
1
2
0
0
1
12
4
4
35
65

0
1
1
0
0
2
0
2
4
1
0
0
2
2
0
10
4
8
45
80

1
0
0
1
2
2
1
1
4
1
0
1
1
1
0
4
4
4
32
35

0
1
0
1
2
0
2
0
6
1
0
2
0
1
0
6
4
6
44
45

0
1
0
1
2
0
0
2
6
1
0
0
2
0
1
6
4
6
28
40

0
1
0
1
2
0
1
1
0
0
1
1
1
0
2
8
4
4
36
40

0
1
0
1
0
2
2
0
4
0
1
2
0
2
0
10
4
8
42
55

0
0
1
2
2
0
2
2
0
1
0
2
2
0
6
4
8
54
75

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M. Faccio et al.

Table 3. Parts attributes.

Parts

SKUi

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1
1
2
2
5
5
2
2
6
6
6
4
4
4
4
10
12
20
30
50

Description

Ci

Engine A
Engine B
Frame A
Frame B
Carening A
Carening B
Wheels A
Wheels B
Ligths
Suspensions A
Suspensions B
Brakes A
Brakes B
Silencer A
Silencer B
Electric wires
Levers
Buttons
Fastners
Screw-bolts

750
850
780
670
60
80
150
130
40
95
75
150
120
90
70
20
15
3
1
0.2

The derived variables were then calculated using the formulations:

(6) average supply lead time LT;

(11) safety stock SSi,l.;
(10) kanban number kanbani,l.

P P
The new average lead time is 39 minutes and the total P
Kanban number is 323 kanban
l
i kanbani,l = 323
kanban. Figure 5 shows the kanban number for each part i as l kanbani;l for all possible combinations of the decision
variables Nop, LS (blue lines).

The green line represents the previous case company situation with Nop = 4; K = 3.5.
The red line represents the optimal solution after the procedure application Nop = 5; K = 4.5.
The yellow line represents the situation with the same service level as the previous situation K = 3.5; and
Nop = 6.

By looking at the cost function, it is very interesting to analyse the differences between the optimal solution (red line
in Figure 3; Nop = 5; K = 4.5) and the previous solution (green line in Figure 3, Nop = 5; K = 3.5). Figure 6 shows a
close-up of the total cost function Ctot with different NopLS combinations. The previous solution adopted by the case
company and the optimal procedure solution given by the Ctot function minimisation are also indicated.
As results, it is possible to highlight that:

Both the previous and optimal solutions after the procedure application are, according to Emde and Boysen
(2012b), typical supermarket properties (i.e. a supermarket serves between 20 and 30 stations and is located in
the direct vicinity of the assigned line segment. Three to ve tow trains (handling operators) are assigned to
each supermarket, so that ve stations is a representative number of stopovers visited per tour, and up to three
visits per station and hour are planned. For each tow train, a complete tour typically amounts to merely 200
500 metres) By contrast, the different setting of the decision variables, even though within Emde and Boysens
(2012b) boundaries, has a great impact on the total annual management cost of the supermarket system
(Table 4).
The optimal setting of the decision variables from Nop = 4; K = 3.5 to Nop = 5; K = 4.5 exacerbates the potential
total cost reduction (e124,000/year) versus the previous solution, as shown in Table 4.
The increasing in the number of handling operators reduces average expected supply lead time. The supply
lead-time reduction given by Nop = 5 versus Nop = 4 allows a large increase in the service level (from K = 3.5

International Journal of Production Research

3009

Figure 5. Kanban number for NopLS combinations (available in colour online).

Figure 6. Ctot for NopLS combination (available in colour online).

to K = 4.5), which also reduces the stocks in the assembly system (kanban number reduction) and nally
reduces total costs.
By comparing the previous case company solution (Nop = 4; K = 3.5) with a solution with the same service
level but an oversized number of handling operators (Nop = 6; K = 3.5), it is interesting to note that the total

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M. Faccio et al.

Table 4. Results.

Nop
K
Kanban
Ctot [e/year]
Cinv [e/year]
Ch [e/year]
Cso [e/year]

Previous case company solution

Optimal solution

Other solution

4
3.5
357
334,415
87,509
104,000
142,906

5
4.5
323
210,670
79,443
130,000
1227

6
3.5
245
276,746
61,360
156,000
59,386

costs of the last choice are minor and closer to the optimal solution. This implies that when the decision variables are close to the optimal setting, it is generally better to oversize than it is to undersize them. In other
words, it would be better to use six rather than four handling operators (Figure 2 and Table 4).

5. Bill of materials inuence on the optimal setting of the decision variables in the kanban number optimisation
problem
The objective of this section is to highlight how some factors such as the bill of materials and the diversity between the
bill of materials of different models assembled in the same assembly line have a large impact on the kanban number
optimisation and, obviously, on setting the optimal decision variables Nop and LS.
By looking at the classic Toyota formulation, it is clear how the diversity of the bill of materials of the different
models assembled on a certain assembly line is not considered. By contrast, as demonstrated in the previous sections,
the well-known Toyota formulation uses parameters that are a function of other parameters or of other decision variables
without an integrated approach towards total cost minimisation.
In a levelled production typical of the JIT environment (Ql constant), the diversity of the bill of materials between
the models assembled in the same assembly line is the main driver of the variation in parts consumption. For this reason, this section extends the results obtained in the applicative case to demonstrate the inconsistency of a simple application of the classical Toyota formulation in the kanban number denition problem.
Starting from the applicative case, we generated 1000 different scenarios by changing only the following input data:

The bill of materials of the produced models;

The production mix (considering a levelled production equal to Ql of the case company for each assembly line).

In this sense, we obtained 1000 different supermarket/multiple mixed-model assembly-line systems. The proposed
kanban number optimisation procedure was applied to each one of these scenarios, and the results of the different
scenarios compared.
5.1. Bill of materials generation
All 1000 scenarios generated have the same case company parameters, except for BOMi,m and ci. In order to compare
the different scenarios generated, the bill of materials was generated according to these constraints:

BOMi,m was the same of the case company for each model m.
For each part i and model m, the difference between the generated BOMi,m and the BOMi,m of the case
company were not excessively high (less than 30%).
For the given BOMi,m of the considered scenarios, ci was generated to keep the raw material incidence the
same as that for the case company (pm = 40%) in order not to change the inuence of the value of the raw
materials on stock-out costs.

In order to understand how the diversity (or the commonality) of the different values of BOMi,m impact on the
kanban number optimisation problem, a unique measure for each assembly line l was introduced called the model
diversity index. This was a positive number that increased when diversity between the models increased, and it was
dened as:

International Journal of Production Research

divl

X
i

ri;l
1
 i;l  Il %
BOM

3011

14

where:
Ml is the number of models assembled on assembly line l (in our case, Ml = 3 8 l);
Il is the number of parts managed on assembly line l (in our case, Il = 20 8 l)
 i;l
BOM

ri;l

X BOMi;m
average utilisation coefficient of part i on line l
Ml
m

 i;l 2
p X BOMi;m  BOM

standard deviation of the utilisation coefficient of partion line l

Ml
m

15

16

It is also possible to dene a unique value of the model diversity index for the entire supermarket/multiple mixed-model
assembly-line system as:
div

X divl  Ql
l

%

17

It is clear that the highest values of the div index are given when a certain part i is used only in one kind of model m.
In this case, a low variation of the production mix varies parts consumption. By contrast (in the case of levelled
production where Ql = constant) when the utilisation of a certain part i is the same for all models (BOMi,m is the same
for all models m), div = 0 for the considered part i, even with the high variation in the production mix.
The BOMi,m values were generated in order to obtain div values in the range of 080%. The results were then
collected into three classes:

A (div 020%);
B (div 2040%);
C (div 4080%).

The case company had div = 52.3%, and thus it was in the C class.
5.2. Production mix generation
The production mix was generated by considering a coefcient of variation (CV%) varying from 0 to 80%. The results
were then collected into three classes:

A (div 020%);
B (div 2040%);
C (div 4080%).

The related standard deviations for the parts i were obtained using Equation (1). The case company had a CV = 30%
and thus it was in the B class.
5.3. Results of the analysis of the bill of materials inuence
The following gures show the results of the analysis of the bill of materials inuence. Each point in each graph represents a different assembly system where its parameters are the same as those of the case company except for:

The bill of materials of its 12 assembled models (summarised by the div index);
The production mix variation (summarised by the CV index).

Figure 7 plots the total cost Ctot as a function of the model diversity index (div) parameterised for the different
classes of CV (colours) as shown in the graph legend. Figure 8 plots the total kanban number in the system as a

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M. Faccio et al.

Figure 7. Ctot as a function of the div and CV indexes (pm = 40%) (available in colour online).

Figure 8. Total kanban number as a function of the div and CV indexes (pm = 40%) (available in colour online).

function of the model diversity index (div) parameterised for the different classes of CV (colours) as shown in the graph
legend. Figure 9 plots the number of handling operators Nop as a function of the model diversity index (div) parameterised for the different classes of CV (colours) as shown in the graph legend. For all three graphs, the trend lines for each
class of CV are reported with different colours: red for the A class, blue for the B class and green for the C class.

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Figure 9. Nop as a function of the div and CV indexes (pm = 40%) (available in colour online).

Looking at Figures 79, the high inuence of the models bill of materials diversity on the kanban system optimisation
in a supermarket/multiple mixed-model assembly line production environment is clear.
Figure 7 shows that the total annual costs of the supermarket/multiple mixed assembly-line system management,
even optimised, increase linearly as a function of the div index as the CV index increases. This trend is the same for the
optimal kanban number (Figure 8) and optimal handling operator number (Figure 9).
If div = 0 (i.e. BOMi,m is the same for all models m) even with high CV values, the variation in parts consumption in
the assembly system is 0 (daily levelled production, JIT environment). Thus, it is possible to afrm that in a supermarket
feeding an assembly-line system, total management costs increase as the models bill of materials diversity increase; this
effect is amplied the greater the variation in daily production mix. This is a very important result that demonstrates how,
in the case of a high bill of materials diversity (div), it could be preferable to apply in a supermarket context the parts
kitting, especially for rare parts, while the kanban system can be maintained for common parts. In a kitting policy, parts
inventories are kept at the assembly stations, and the specic assortments of components required to perform the assembly operation are grouped together and placed into a kit container, where there is a one-to-one correspondence between
the kit and a certain model produced on the assembly line (Caputo and Pelagagge 2011). During model assembly, the kit
moves with its model through the assembly station, and the assembly tasks are performed using the parts available to the
kit (specic model parts) and those available to the model station (common parts) pulled by the kanban system. It is clear
that the kit preparation, typically made inside the supermarket by handling operators, is an expensive picking operation.
For this reason, it is difcult and generally not economical to apply the kit concept for all parts. By contrast, in some
conditions such as high variability (CV and div), if the kit concept is correctly applied to the right parts, it can reduce total
costs. This point needs further research.
Figure 8 demonstrates how the kanban number optimisation problem is largely inuenced by factors that are not
considered in classical formulations. This result shows that it is possible to solve this problem only with an integrated
approach that takes into account all variables.
Figure 9 shows that the minimal number of handling operators to make possible assembly line feeding is three.
Looking at all points, the optimal number of handling operators ranges from three to eight with a very wide range of
variation. As evidenced in Figure 2, the number of handling operators has a great inuence on all cost factors (handling,
inventory, stock-outs), and its optimal value is greatly inuenced by the bill of materials diversity of different models
(as well as by the CV). As well as total costs and total kanban number, in a supermarket feeding an assembly-line

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Table 5. Bill of materials and CV inuence analysis.

system, the number of handling operators has to increase as the models bill of materials diversity increases. This effect
is amplied as the daily production mix variation grows.
Table 5 summarises an ABC cross-matrix results. All variables are considered to be continuous in order to understand the aematical trend and relations. For each zone (AA, AB, etc), the average values of div and CV of the considered points in the range are reported and coloured in grey. Moreover, Table 5 shows the incidence of raw materials on
the product value cm, in order to understand the inuence of pm. As pm = 40% (Figures 79 and coloured in dark grey
in Table 5), 1000 scenarios were generated for pm = 30% and 1000 for pm = 50%.
This analysis stresses the inadequacy of the classical approaches for setting optimal decision variables in such a
supermarket/multiple mixed-model assembly-line system. It also gives an important indication of how to set the decision
variables Nop and LS as a function of the position of the particular system studied in the ABC cross-matrix.
It is clear that:

For each xed value of pm, Ctot, the annual expected management cost, increases when div and CV increase
(from AA to CC in all directions), i.e. the effect of the variability in the bill of materials and in the production
mix has a negative impact on management costs.
For each xed value of pm, the total optimal number of kanban in the production system increases when div
and CV increase (from AA to CC in all = directions).
For each xed value of pm, the optimal number of handling operators Nop increases when div and CV increase
(from AA to CC in all directions).
The optimum service level LS is usually set to the highest value because in the considered production environment, the product value cm is high, which means that the unitary stock-out cost cm(1 pm) is high as well.
This result was also conrmed by Emde and Boysen (2012b) (i.e. a reliable and exible parts supply is indispensable, because otherwise material shortages leading to line stoppages and hundreds of assembly workers
becoming idle would occur). By contrast, when pm is set to 50% in the CC case, the procedure averagely sets
the service level to 4.3. This means that in the case of a lower incidence of stock-out costs, the proposed procedure can give a different setting of the optimal service level that decreases from AA to CC. pm does not have
a high impact (in the tested range) in the procedure application.

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As a general result, as demonstrated by Figure 9 and by other results not reported in this paper, the following
can be afrmed. Starting from the minimal number of handling operators necessary for the assembly line feeding in the average conditions of demand and div = 0 (in this study, Nop = 3), and in the case of a high value of
CV (>40%), the optimal number of handling operators duplicates for div = 1 with a linear trend. If CV < 40%,
the optimal number of handling operators always increases when div increases but at a low rate.

6. Conclusions
The proposed procedure based on the minimisation of the total cost function aims to optimally set all variables related
to the management of a supermarket feeding a multiple mixed-model assembly-line system. These variables include the
number of handling operators, the parts service level at assembly stations, the expected average supply lead time, and
the kanban number. As demonstrated during the procedure, for a given system, once the number of handling operators
Nop and the parts service level LS have been dened, all other variables are univocally dened. Further, the proposed
procedure demonstrates how the application of the classical kanban number calculation (e.g. using the well-known
Toyota formulation) can be unable to bring about substantial results without an integrated approach. As demonstrated in
the literature review, even though there are a huge number of contributions on kanban number optimisation, the problem
in a supermarket context has not been studied to any detailed extent. Thus, the supermarket concept is still a young
research topic, and further research is needed.
In this paper, after the description of the proposed procedure, an applicative case of a motorcycle manufacturer was
illustrated, and at the end a parametrical analysis of the diversity of the bill of materials was developed for the case of
daily levelled production, which is typical of JIT environments.
The results reported in the paper show that:

Even though different solutions satisfy Emde and Boysens (2012b) typical supermarket properties, the
proposed procedure can reduce total costs, as demonstrated by the 35% total cost reduction in the case
company.
Increasing the number of handling operators reduces the average expected supply lead time in order to improve
service levels and reduce total costs. Thus, when the decision variables are close to the optimal setting, it is
generally better from a total cost point of view to oversize than to undersize them.
The decision variables are greatly inuenced by the models bill of materials diversity and by the production
mix variation, but these parameters are not evident in the classical formulation used in the JIT system management (i.e. Toyota kanban number formulation). According to an ABC cross-matrix of the function of the two
parameters div and CV, it can be observed that total costs, kanban number, and handling operators number
increase from A to C in all directions, while service level decreases from A to C, in line with Emde and
Boysen (2012b).
If div = 0, even with a high value of production mix variation (high CV values), the variation in parts consumption in the assembly system is 0 with a daily levelled production, typical of JIT environments. Thus, it is possible
to afrm that in a supermarket feeding an assembly-line system, total management costs increase as the models
bill of materials diversity (div) increases; this effect is greater as the daily production mix variation (CV) grows.
For this reason, in the case of high values of the diversity index, especially in the case of high variations in
production mix, a complete pull kanban system would not be the best methodology to manage a supermarket
feeding a multiple mixed assembly system. However, a kit use may be preferable for the specic model parts,
where this kit moves from one assembly station to another together with its product model.

The actual industrial scenario is that operation managers, in the optimisation of supermarket/multi-mixed assembly-line
systems, are often driven by rules of thumb, while current research is still young and not yet able to provide practitioners
with effective methodologies and procedures. For these reasons, and because of its increasing diffusion and importance in
the JIT production environment, the optimisation of the supermarket concept is a challenging research area in future years.
On the other hand, related to the supermarket concept, it is possible to nd different feeding policies: kitting and kanban
line stocking systems. Despite the need for knowledge about when and where each system would be applicable in industry,
the research is quite sparse (Huaa and Johnson 2010).
In this context, the next research steps are:

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M. Faccio et al.

to quantitatively identify and analyse the inuencing factors in the right feeding policy denition problem
understanding where to apply the kanban or the kitting feeding system;
how to integrate the proposed kanban number optimisation procedure in a wider integrated feeding design
methodology.

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