Principles of Management CLEP Practice Exam

What does the term "kanban system" refer to in production management?

1. A method to track employee performance

2. A system to link production rate to demand

3. A strategy for market analysis

4. A financial forecasting tool

The correct answer is: A system to link production rate to demand

The term "kanban system" refers to a methodology that integrates production with demand by utilizing visual signals to manage workflows effectively. In the context of production management, the kanban system helps organizations regulate their production processes based on actual customer demand rather than forecasts. This “pull” system allows for a more responsive approach, reducing waste and inventory while ensuring that production aligns closely with market needs. By linking production rate to demand, the kanban system facilitates continuous improvement and flexibility in manufacturing processes. It often uses cards or other visual indicators to signal when more inventory or work is needed, which promotes efficient resource use and streamlined production scheduling. This adaptability to changing consumer preferences and demand fluctuations is a vital aspect of modern production management.