Abstract
Conventional Kanban system requires an assumption that no defect exists in a container delivered to the succeeding station. In this paper, the effect of the defective parts in a container on the optimal operation planning is analyzed. The analysis leads to the optimal order interval (R^*) and the optimal container capacity (u^*) which minimize the total operating costs including the shortage inventory cost per hour due to the defective parts in the fixed order interval Kanban system. The result shows that u^* must always be smaller than the optimal container capacity under the conditions of no defective part.
