operations metrics

Throughput time (T)

Total time spent by a unit in a process from start to end

Includes activities that make up the process

Includes waiting time between activities

Is the time of the longest path in case of parallel paths

Measured in unit units of time, days minutes, etc.

What can throughput time also be called?

Lead time

Cycle time (C)

Average time interval between two consecutive units departing (or Outputting from) the process

Measured in unit units of time, days minutes, etc.

Flow rate (R)

Number of units that emerge from a process per unit of time

Measured in units of flow units per unit time, for example, customers per day or pieces per minute, etc.

Flow rate (R) Is the inverse of?

Cycle time

(1 / C) = R

(1 / R) = C

Units per minute is the inverse of minutes between consecutive units

A car going 60miles per hour is a flow rate. Each mile takes 1/60 of a mile which is the cycle time.

Inventory (I)

Total number of units in the process, including at the start (Raw materials), Middle (work in process), and end (finished goods), and including those waiting, and those being processed in an activity.

Can be materials, people or information

Measured in unit units pieces, kilograms customers, emails, etc.

Little’s Law

I = T*R (Same as I=T/C)

Inventory = Throughput time * Flow Rate

Inventory = Throughput time / Cycle time

Cycle time with Littles law

Cycle time = inventory / flow rate

Always make sure units are synced up

Inventory with Littles law

Inventory = Flow rate * Cycle time

Make sure units are synced up

Flow rate with Littles law

Flow rate = Inventory / Cycle time

Little Law example

- If a restaurant serves 10 customers per hour and each customer stays for 30 minutes, then at any given time, on average, there are 5 customers in the restaurant:

L = 10 customers per hour * 0.5 hours = 5 customers

Processing time

Time taken to complete that activity

Activity may involve single flow unit or a batch of flow units being processed together such as eight cookies taking 12 minutes to bake in oven (PT = 12min.)

Measured in unit units of time days minutes

What is the difference between processing time and throughput time?

Processing time is just the “Working” time, while throughput time Is the entire journey the unit takes in the process.

Activity capacity

Number of units per unit of time that can be processed at an activity

Capacity may be based on a batch of flow units being processed together such as eight cookies, taking 12 minutes for baking activity in oven (capacity = 40 cookies per hour, 0.67 cookies per minute)

Capacity is also based on number of resources, such as two ovens(capacity= 80 cookies per hour with each oven capacity of 40 cookies per hour)

Bottleneck

Activity in the process with the smallest capacity

Bottleneck activity determines the flow rate of the process, also known as capacity of the process

Resource

Person or machine or team of persons or set of machine person required to complete an activity

Example:

Person: Baker

Machine: oven

Team of persons: wrapper, boxer

Machine – person set:rolling pin, baker

Capacity of activity (Formula)

= (Number of resources* Number of units being produced by a resource) / Processing time

Demand rate

Number of units required per unit of time

Based on a requirement of the process, customer

Process flow rate

Lowest of capacity of bottleneck activity and demand rate

In addition, the supply rate of raw materials used as input, when it is lower than capacity of the bottleneck activity and the demand rate of customers, would limit the rate

Th, process flow rate = minimum of(supply, demand, capacity)

Capacity utilization of activity

Extent to which the capacity of an activity is being utilized. Same as the amount of work done compared to the work that can be done

Can be calculated as:

Flow rate of process / capacity of activity