When determining the number of kanban containers, discuss the impact of alpha, the policy variable, on the total amount of inventory in the system
If alpha is set equal to zero, is system inventory zero? What would be required to achieve a system-wide inventory of zero?
The policy variable alpha adds safety stock to cover for unexpected circumstances, for example a quality issue or delays in supply. Even if alpha is zero, there is still inventory in the system as dictated by the average demand during lead time DDLT. The DDLT is calculated by multiplying the daily demand for parts by the sum of the average container travel time plus the average container process time. One unappealing way for system-wide inventory of zero would be for demand to drop to zero. Another way for system-wide inventory to be close to zero would be for a manufacturer to have very large capacity and fast processing. Such capacity and speed would be prohibitively expensive for processing tangible goods.
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