Impact of short-term variations in demand on opportunity costs in a just-in-time kanban system

In this article, the relationship between work-in-process (WIP) inventory and opportunity costs in a two-card kanban system with varying demand is examined. The simulation results indicate that a WIP inventory of one may not be ideal in a Just-in-Time (JIT) kanban environment that experiences fluctuating demand. It is observed that a WIP inventory of two might be more appropriate in reducing opportunity cost and thus minimizing the overall cost of inventory in a JIT kanban system with short-term variations in demand.