Module 1 Transcript

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Operations Management: Analysis and

Improvement Methods Module 1 Process
Analysis
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Contents
Lesson 1-1
Lesson 1-1.1 Process View of Operations (part 1)
Lesson 1-2
Lesson 1-2.1 Process Flow Analysis
Lesson 1-3
Lesson 1-3.1 Capacity and Utilization
Lesson 1-4
Lesson 1-4.1 Little's Law
Lesson 1-1
Operations - Slide 1
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Operations are composed of a collection of activities that are
Purposeful
Planned
Coordinated
To perform activities, operations need resources
Transcript
We are going to look at operations, whether they be service operations or manufacturing operations, and
look at these operations as a process composed of activities. So, when we talk about operations in
general, what we are talking about are activities that are generally purposeful so that there is a reason for
doing this activity. We want them to be planned so that there is an effort to actually manage these
activities and we want them to be coordinated as they are being performed. This is opposed to random
activities that we could think of. So for example if I think in terms of boxing, when a fighter trains in a
boxing ring, there's a process that they follow and there's a purpose for that particular training. They plan
this out or if it's not the boxer who plans it out, then it's the trainer who plans it out and then they go
through a coordinated set of movements to make sure that the boxer is prepared for their fight. On the
other hand, if you think of a fight at a bar, mostly, there's no purpose to them. Hopefully, they haven't
been planned, they just happen randomly and quite obviously they're not coordinated. And so even
though there is an activity there, it's not the kind of activity that we are interested in. So in our case, we
are going to be looking at activities that are purposeful, planned and coordinated. Now, when you take
such activities, to do those activities, we need to have resources. Now those resources could be machines
in a manufacturing process. They could be human operators. They could be robots. They could be
computers, but we need to have some resources that are required to perform these activities. It's possible
that we do not have to have external resources. Where the resources are being performed by the items
that are going through a process. So for example, if a customer uses a self checkout, there is some
resource which is the self checkout but the activity there may be done by the person themselves.
Process View - Slide 2
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Processes are structured activities that transform inputs to outputs (and are usually repetitive)
the outputs can be products or services
The process view shows how an organization uses resources to coordinate activities
Transcript
So in general though, what we're looking for then, is the set of activities and resources put together and
when they are put together in a structured form, we call it a process. Processes transform inputs to
outputs. Usually, the kind of processes that we are going to look at, are processes that are repetitive. So
that they are being performed over and over again, so we can start thinking in terms of what happens to
this process on average over a long period of time? How can we improve this particular process? So on
and so forth. Now the outputs to this processes can be products or they can be services. For example, if
you are making cars, the output product is the car. If you are, for example, offering haircuts, then the
service is the haircut that we're offering. So, the output can be either a physical object or something that-
some service that's being provided to customers. So when we think of a process view, what we are
looking at is how are organizations organized to perform operations which are then looked at as being
processes which are then being composed of activities. Now, as we think in terms of this processes, we
have either customers that may be flowing through this activities, we may have products that are going
through a manufacturing process and so we may have different kinds of things that are flowing through
this process and we need to know at what level or what granularity are we going to consider this
particular process. So, if for example I'm looking at customers coming into a McDonald's, the customers
might be coming in a car. Some cars may have one person, some cars may help three people, some cars
may have five people. If they're going through the drive-through, I might look at the entire car as being
one flow unit. On the other hand, if they come and decide to dine in, then I might look at the individuals
in the car as being the flow units. So, what constitutes a flow unit depends entirely on our situation and
what it is that we are trying to analyze.
Process Flow Units - Slide 3
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The basic unit of flow at which we wish to study a process
Customers at a bank
Students in a graduate program
Credit card applications
Cases at the Supreme Court
Parts produced in a job shop
Transcript
Now, I've given a few examples here to show you what we might consider as being flow units. As I
mentioned, we could have customers and in this case, they could be going through a bank,we could have
students going through a graduate program, we could have credit card applications that are being
processed in the back office of a bank, we could look at the US Supreme Court and look at the cases that
the US Supreme Court handles and each case that comes in will be a flow unit for that supreme court.
Then, sort of the generic thing we can think of is parts that are being produced in any kind of
manufacturing job shop. So, once we've decided what that flow unit is, we have to start thinking in terms
of how those flow units flow through our process.
Process Representation - Slide 4
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Processes can be represented as a connected network of activities
Squares represent activities

Arrows in the network represent precedence requirements between activities
Triangles represent inventory i.e. flow units waiting to undergo the next activity
Process representation is shown as a flow chart. Order of the flow chart is
Activity 1
Activity 2
Inventories
Activity 3
Activities are represented by squares and Inventory by a triangle. Squares and trainable are connected
through arrows.
Transcript
Now to do that, we will often represent our process using certain symbols. So for example, an activity in
a process will usually be represented by a square, and a bunch of activities will be connected to each
other and any connection from one activity to the other, will be represented by an arrow. If there is any
amount of waiting for flow units in between activities, we will represent such locations by triangles to
represent inventory. So inventory basically are flow units that are waiting to undergo the next activity.
So, if you look at the figure that we've shown, what you have are three activities being represented by
three squares. There's inventory in between activity two and activity three, and we have arrows
connecting activity one to activity two, to the inventory to activity three. What their signifies is that a
flow unit is going to enter activity one, get some processing done at activity one, flow to activity two.
Then may have to wait for activity three to commence, and then at some point when activity three
commences, it will go into activity three, and eventually leave the system. Now, as we look at a such
flow diagrams, we have to start thinking about how flow units flow through our process.
Small Medical Units - Slide 5
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Process in small medical units
Small medical unit process is shown in a flow chart diagram. It consists of five stations which are
Check in
Nurses
X-Ray
Physicians
Lab
Patients come at check in station which send them to nurse station or directly to physicians. Physicians
can send them directly to lab while Nurse station can send them to Physicians or to x-ray station which
then send them to physicians or lab station.
Transcript
So, let's take the example of a medical unit. I call it a medical unit instead of a clinic or a hospital
because I want to start out by saying let's say that this is a small clinic. Since it's a small clinic, we might
decide that we have to have our different specialists, at different locations. So for example, we may have
a station wherein people come in and check in. We may have a nurse's station, we may have an area for
the physicians, we may even have a small x-ray lab, and we may have maybe a lab where we do other
kinds of analysis. So, depending on when patients arrive, then they may come in depending on what
kind of problem they're facing, they may end up going first to the check-in, then to the nurse, the nurse
might send them to the x-ray unit, and after the x-rays are done, they may go and see a physician. Or
they may come in, and they may check in, they may go to the nurse, and from there they may go to the
physician. So there are a variety of different ways that they could traverse this particular a medical
clinic. Now, this particular medical clinic because we have organized it according to specializations, the
nurses area, the physicians area, the x-ray area, the lab area et cetera, we will say that this is a process
focus. Because there are different processes that are grouped together. But now let's think what happens
suppose a patient comes in, and they have an emergency. Because they have an emergency, they have to
be rushed through, and other people have to be displaced.
Medical Units with Emergency Care - Slide 6
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Process in medical units with emergency care
Emergency care unit is shown with the following stations in a hospital
Check in
Nurses
X-Ray
Physicians
Lab
Transcript
Now, if our medical unit was large enough, we would expect to see a large number of such emergencies
come into our particular clinic. We might decide here the people who come for emergency care ought to
be treated separately. So, we might create an emergency care unit, which is separate from the rest of the
area. In this emergency care area, we might again have a nurse's station, we may have a physician
station, we may have a number of x-ray machines, and we may have some lab area et cetera. So, now we
have a separate area where anyone with an emergency care requirement goes into that area, the other
patients go elsewhere.
Medical Units with Pregnancy Care - Slide 7
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Process in medical units with Pregnancy care
Pregnancy care unit is shown with the following units in a hospital
Check in
Nurses
X-Ray
Physicians
Lab
Transcript
Very soon, we might realize, oh, there are a lot of women coming in who are pregnant, and their
requirements are very different from the other patients. So we may have a pregnancy care unit. We may
have similarly a geriatric unit. We will have a cancer unit. So, our simple facility starts getting
specialized areas, and so what we are doing now is depending on the type of flow unit, or, customer, or
patient in this case that's coming in, we are trying to specialize so that we get different areas which are
specialized for particular flow units, or products. This is quite different than the way we started out our
clinic, where we were specialized depending on care, or specialization that was being offered in a
particular area. So, we now go from a process flow to a product flow in our medical clinic. So,
accordingly we distinguish between these two flows in our operations.
Product Focused Operations - Slide 8
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Product focus - resources and activities required for a "product family" or customer type are grouped
together
Transcript
The first one, we'll call Product Focused Operations. So in this operations are arranged so that all the
resources and activities that are required for a particular class of a product, or flow units are grouped
together in one area. So, for example, if I have a manufacturing plant, I might have an area where I only
do engine assemblies. I might have an area where I only do transmission assemblies. I might have an
area where I do brake assemblies. Now, on the other hand, if I was a hospital I might have a geriatric
clinic as we said, we might have a cancer clinic, heart health clinic, and so on where we treat different
patients. So, since we have different patients, these are different product categories, and for each product
category then we provide a specialized area where everything that's required to take care of those
particular patients is kept in that particular area.
Process Focused Operations - Slide 9
Similar skills or technologies are grouped together in specialized departments
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Transcript
As opposed to that, we have what we'll call a Process Focused Operation. So in the process focused
operation, we group similar skills. This is the birds of a feather flock together idea. Where we may have
all milling machines together, all grinding machines together, we may have the stamping machines
together. In a services company, we might have a billing department, we may have an auditing
department, we may even have a customer complaint department. Each of these departments specializes
in one activity. A patient, or a client may come into the billing department, and have some work there,
they may want to go to the auditing department, then they may want to go to the customer complaint
department if they don't like what has happened to them during this experience. So, our product then
flows from one specialist area to another specialist area, and this is what we call a process focused
operation.
Layout Characterization - Slide 10
Linear - flow units move sequentially form one activity to the next in a fixed sequence
Getting your food at Chipotle

Car assembly
Jumbled or Job-Shop - Flow unite may have different sequence of activities

Patient flow in a clinic
Transcript
Even within such process focus or product focused operations, we often have to look at how flow units
move through the different resources that we have assigned to this particular process. So, for example,
when you go to get food at a Chipotle. The first station you are asked whether you want a burrito or a
bowl. You specify what that is, and then based on what you specify then they go ahead to the next
station, and ask you what all things do you want on that burrito. Then they go to the next station, and
then they decide what all condiments, and dressings, and things like that can be added to your particular
order. From there it goes on, and then you go to pay. So every person goes through the line in this
particular order. This is what we call a linear flow, because everyone has this following exactly the same
order. As opposed to this, it's possible that we may have cases where people go through different stations
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or different activities in different sequences. As we talked about when we talked about our clinic, a
patient may come in, may have to check in, may go to the nurse, and maybe send to the x-ray before
being sent to the doctor. Or different patient may come in, they check in, they go to the nurse, and
maybe sent directly to the doctor. A third patient may come in they already know they have to do their
x-ray, so they don't have to go to the nurse, they go to the x-ray first, they may have to do some lab
work, then they go to the nurse, then they go to the physician. So, each particular patient may have a
slightly different flow, and this is what we call a Jumbled Flow. Usually, this is the situation that we see
in what are called job shops. So flow units in this particular case, may have very different sequence of
activities.
Image - Slide 11
Image of a factory
Transcript
When we have flow units flowing through our facility it's possible that we don't want each unit to flow
separately. So for example, if I think in terms of a chemical plant in which liquids are flowing through
some process, then it's really hard for me to distinguish what a flow unit is because there's a continuous
flow of this liquid.
Batching - Slide 12
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Processes can also be charactoerized based on how flow units move between activities through the
process
Continuous Flow
Single Unit Flow
Batch Flow
Transcript
So in this particular case, I may think in terms of quantities that are flowing. So I might say, how many
liters of fluid are flowing through this process, or how many gallons are flowing through this process per
minute? I might have a slightly different situation, for example, when I look at customers going through
a McDonald's, because customers now are discreet I can think of these customers as moving singly
through the process. Sometimes though, looking at customers singly and making them move through the
process one at a time can get expensive. So for example, if I had to shuttle someone, if you go to
Chicago airport, which has multiple terminals. If I want to shuttle people from terminal one to terminal
two to terminal three, It would get really expensive to shuttle these people one person at a time. And so
what we often do is we may have a shuttle bus, or a shuttle train, in which I may have 50 people, or 100
people, who are transported at one time. And so I move these people in batches. And so now my flow
units have to wait to form a batch, and then they move forward in terms of a batch. So as I look at my
process, I have to think in terms of what kind of flows am I looking at? Am I looking at there being a
continuous flow, in which case I have to think of things a little differently than when it's a discrete flow
and single items are flowing? Or is this when there's a batch flow and multiple items are moving together
through the system? Or they may be moving through the system together for only part of the process.
Now, of course, why do we go about batching?
Reasons for Batching - Slide 13
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Economy of Scale
Shared Resource with Changeover
Transcript
So if I take, for example, the case where I had passengers that had to be shuttled from one terminal to the
other, we said that it really was too expensive to transport one person at a time. So there's an economy of
scale in transporting a bunch of them together. Let's take a different example. Suppose I have a large
oven, industrial size oven in which I bake bread. Baking single loaves at a time in a large oven would be
cost prohibitive. And so I may often decide to make a dozen loaves at a time. So these dozen loaves
form a batch, and that batch gets processed all at one time. Now, there are also other occasions where
even though the processing of the item can be done singly, the resource that's being used to process this
particular item may be used for more than one item. So for example, if I look at the same oven that we
were talking about, that oven might be used to make loaves of bread or cookies. Now, the loaves of
bread may have to be baked at one temperature, and the cookies at a slightly different temperature. So
we can't bake all of them together. So what I might do is I might create a batch, and put a batch of
cookies in at one time, take them out, change the temperature of the oven, and then put a batch of loaves
of bread in the oven. And so given that I'm switching between one to the other, and there's a temperature
difference, I have to wait a period of time before the temperature can be changed before the next batch
can go in of the different product. This change over time between processing one kind of product versus
processing another kind of product forces us to work in batches simply because it would be too much to
change directly from a single loaf of bread to single cookie all the time and waste a lot of time changing
temperatures. So this is another reason why we may decide to work in batches.
Types of Linear Flow - Slide 14
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Large Batch vs Small Batch vs Single-Unit
Discrete vs Continuous Flow
Unpaced vs Worker-Paced vs Automated pacing
Transcript
So as we've looked at so far, we can have continuous flow or we can have discrete flow. If you have
discrete flow, we may have a single-unit flow, we can have a small batch, or we could have a fairly large
batch, and depending on the size of the batch, there might be things that we have to worry about in how
these particular batches are moved, if resources are required to move them, and so on and so fourth.
Lastly, when we think of flow units that are moving through a particular process, we have to think about
how those units get moved.
Types of Linear Flow (1 of 2) - Slide 15
Unpaced vs Woker-Paced vs Automated pacing
Transcript
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Now, the simplest kind of process we can think of is where there is a single operator or single worker
who does the entire set of activities that are required to complete an operation for a single-unit. These
are called single worker processes. And in this case, we really don't have to worry about moving the
particle of flow unit from one activity to the other. And so in this case, this is sort of an unpaced, in the
sense that the worker who's doing it decides at what pace they are working, and they're not being hurried
through that particular process. Now, it's also possible that we may form a set of activities where each
activity has their own resource and once that activity is finished with that resource, they pass on the
work to next activity. And so as flow units come through the system, they get passed on from one
activity to another activity. If the resource or the worker that's assigned to that activity controls the pace
at which the flow unit moves through the system, then we call it a worker-paced line. And in a worker-
paced line, it's possible that workers may be waiting for other workers to finish their work, and for some
workers may be busier than other workers. And lastly, we get to the point where we have automated
lines, and in this case, there are conveyor belts, there might be automated cranes, there might be robotic
equipment, which will move the item from one to the other location. Usually in this kind of line it is
common for the pace to be set by the machinery. So the conveyor means at a certain speed, or the
conveyor indexes at a certain speed, so that the operator only has a fixed amount of time to get their
work done. Now, obviously there are variations of this where you can hop on and hop off the conveyor,
and you can sort of cross certain lines. You're given a certain amount of space over which you can work.
And when you get to the end of the space, you have to hop off the conveyor. And so there are a number
of such complicated scenarios we can think of, but in all these cases the equipment that's used to move
the flow unit sets the pace of the manufacturing line.
Types of Linear Flow (2 of 2) - Slide 16
Large Batch va Small Batch va Signle-Unit
Discrete vs Continuous Flow
Unpaced vs Woker-Paced vs Automated pacing
Transcript
And so we can think in terms of the type of flow that we have, whether it is discrete or continuous,
whether it is batch or single-unit flow. And then we can think in terms of how our particular flow unit is
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going to be moved through the process. Now, obviously, with all these different choices, we end up with
a large number of different types of processes.
Process Type Selection - Slide 17
Which process type should one choose?
Project - One off (very low volume), very expensive, unique, very flexible
Job Shop - Multiple Products, low volume, moderate flexibility
Batch - Many products, moderate volume, low flexibility
Line - few products, high volume, very low flexibility
Continuous - Very few products, very high volume, very low flexibility
Transcript
And one of the questions we have to ask ourself is, which of this process is appropriate for a particular
kind of activity, or set of activities that we are looking at? So one way to think of this is the following.
Suppose I were to build a large custom house, right? A McMansion, where it is individually customized
to my tastes. If I wanted to build something like this, this would be a one-off, it would not look like
anything anyone else has done. It's probably very expensive, it's unique. And so the processes required
to be able to build something like this would have to be very flexible. I'd have to have craftsmen who
could do sort of the unique things that I want done to build this house. This is what we call a project
layout. So essentially, each piece of work, each flow unit stays stationary and work is performed on this
particular stationary unit. The next step is where, perhaps, I'm building many different kinds of houses.
And this might be, for example, mobile homes that I'm building. These are the homes that you can hitch
to the back of your car and move them around. Now, in this particular case, because they are somehow
different but there is still some commonality to them, I might build them in a manufacturing facility.
And if I'm building them in a manufacturing facility, and depending on what kinds of special special
things are required in each particular mobile home, the sequence in which they move might be different
as they go through different parts of the manufacturing facility. So in this case we may have multiple
products. Typically this is low volume. There is a moderate amount of flexibility. So if I'm building
mobile homes, then I can't turn around and build yachts in this facility. I could, but it will probably take
a lot of retrofitting before I could do something like that. And so there is a little less flexibility than when
I was looking at a project kind of building where I have the skills and I just work on one thing at a time,
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whether I build a house or whether I build a yacht doesn't matter. The next level up is what we'll call
batch manufacturing. Now, from the multiple products we are going to have many more products. Our
volumes will be higher. And because our volumes are higher, we will have specialized machinery that
can work on these things relatively quickly. The more specialized our machinery, the less flexibility we
have. And so the less flexibility we have, we cannot add randomly all new products into this particular
process. A step up from that would be what we'll call line manufacturing, where we have few products
and we have very high volumes, and we make lots of them. So for example, this clicker I'm holding.
Perhaps I produce tens of thousands of these per day. And so to produce this, I have automated
equipment that runs through this quite quickly. And I cannot make anything else with this automated
equipment. And then finally, we have the notion of continuous manufacturing, where we have very few
products, very high volumes, and the whole thing is custom designed just for those products. So for
example, this might be a transfer line which makes engines for automobiles. And I might have this
transfer line which can only make one kind of engine, but I can make many, many of them in an hour as
they go through different stages of machining through this transfer line. Now the question we have to
ask is, how do we sort of match product and process?
Product-Process Matrix (1 of 2) - Slide 18
A Product-Process Matrix is shown. Volume is shown on a straight line increasing from left to right.
Following are layouts which are drawn over Volume line when we move from low to high volume
activities through the process
Project
Job Shop
Batch
Line
Continuous
Transcript
And herein we will use a framework by and the picture that I'm going to show you comes from a book
by Heizer and Render. Let's start out by looking at just the volume. So if I look at the volume, I can have
low volume or I can have high volume. If I look at low volumes, for extremely low volumes, one-offs, I
should be looking at project layouts, then come the job shop layouts, then comes the batch layout, then
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comes the line layout, and finally the continuous layout.
Product-Process Matrix (2 of 2) - Slide 19
Product-Process Matrix is shown as a graph. Volume is on x-axis and product variety is on y-axis.
Project layout is at high product variety and low volume whereas Continuous layout is high volume and
low product variety. Job shop, Batch and Line processes are on the diagonal between project and
continuous.
Transcript
But what happens if I have high product variety? Now, if I have high product variety but I have low
volume, obviously, project works for me. So if I look at a second axis, if I create a vertical axis in which
I look at product variety and product variety goes from low to high. At the high end, I have the project
where I have product variety and now low volume. It doesn't make sense to think of something where I
have low product variety and low value, because in that particular case, that's what we are looking at
specialization. So that a low product variety means that I'm really specialized, it's one particular kind of
house that I'm building, or one particular kind of product that I'm building. In which case it might be
better to automate it if I'm going to be building it over and over again. On the other extreme, if I have
very high volumes, but if I have low product variety, then I can look at a continuous process. And then
the other different types of processes line up along the diagonal. So that if I have somewhat less variety
but somewhat higher volume, I get a job shop. If I have slightly less variety but slightly higher volume, I
get to batch processing, and then to line processing, etc. If I look at the corners which have not been
covered, if I look at the low, low, and the high, high, then those two do not work with any of these
different processes that we have looked at. Usually, if I have high variety and I have high volume, then I
have to think in terms of what's called mass customization. Now, mass customization is typically where
we build a standard product and then differentiate it in the end with some small change, so it looks like
we are providing a lot of variety, even though the guts of the process are still the same. So for example,
if I decide to have this clicker, which I have in my hand, and I decide that I want to have a lot of variety.
One way I can provide variety is to have different colors. And I can provide these colors by making
black clickers and then dipping them in some kind of dye to give different colors to them. So that the
process to make the clickers was the same, but then I customized it a quick process of putting it in a dye.
If I look at the low, low, this is one of a kind product usually, and this is typically what would be done by
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a do it yourself enthusiast, for example, and it's not a repeatable process. So it's not something that we
need to worry about. And so there are ways to get around some of the limitations of this process. But in
general we can categorize our processes in this fashion.
Summary - Slide 20
Process view of operations
Process flow types
Process type selection
Transcript
So in summary then, what have we learnt? We've learned that we can look at operations as processes,
and processes themselves as being structured activities that we are doing with a purpose. The processes
can have different types of flows. And then based on the type of flow, the type of variety we require and
the type of volumes that we have, we can decide which is the best process that we can use for this
particular type of operation.
Lesson 1-2
Lesson 1-2.1 Process Flow Analysis
Introduction - Slide 21
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In the previous lesson we looked at a process view of operations, and different types of process flows.
We will now start analyzing these processes by defining some ways we can measure the behavior of
such processes.
Transcript
In the previous lesson, we looked at the process view of operations. And we looked at different types of
processes. Now we will start talking about how we can go about analyzing these particular processes.
Image - Slide 22
Cycle time: leaving every 10 minutes
Flow Rate: leaving every hour
Transcript
So let's start out with a simple example. Let's look at this car wash. And in this particular car wash, we
have cars coming in from one end and cars coming out and we're standing out and watching the cars as
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they leave. And what we notice is that there's a car that seems to be leaving every ten minutes. So, every
ten minutes a car leaves, which means that in an hour there are about six cars that are leaving this car
wash. Now, the ten minute time, the gap in-between one car leaving and the next car leaving, we will
call the Cycle Time. If we look at the number of cars leaving per unit time, in this case an hour, we will
call it the Flow Rate. So the flow rate for our particular car wash is six per hour, versus the cycle time for
our car wash is ten minutes.
Image - Slide 23
Flow Time: 25 minutes
Transcript
Now, let's see what happens when we look at a particular car. As we are watching this cars, we have all
these gray colored cars, dusty and all coming in and they come out nice and shiny clean on the other
end. But certainly we see this new car and this new car is a brown color. And we say wait a minute, let's
see what happens to this car. So we wait to see what happens to this car, what color it is when it comes
out. And we wait ten minutes, there's still a green car coming out. And we wait for some time, and you
find out that it takes 25 minutes for this car to come out. So even though there's a car coming out every
10 minutes when our car goes in, our brown car, and comes out as a shiny red car at the other end it took
it 25 minutes to go through the car wash to eventually come out. This 25 minutes we will call the Flow
Time, or the Throughput Time. Notice that the throughput time or flow time, which is 25 minutes, is
different than our cycle time, which was 10 minutes. So even though a car's coming out every 10
minutes, a specific car going into the car wash will take 25 minutes to come out.
Process Flow Metrics - Slide 24
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Cycle time
Time between two consecutive units departing the process
Flow Rate
Rate at which units depart the system

Flow Rate = 1/(Cycle Time)
Transcript
So even though there's a car coming out every 10 minutes when our car goes in, our brown car, and
comes out as a shiny red car at the other end it took it 25 minutes to go through the car wash to
eventually come out. This 25 minutes we will call the Flow Time, or the Throughput Time. Notice that
the throughput time or flow time, which is 25 minutes, is different than our cycle time, which was 10
minutes. So even though a car's coming out every 10 minutes, a specific car going into the car wash will
take 25 minutes to come out. So we've now defined a Cycle Time, we've defined a Flow Rate. So the
cycle time was the time between two consecutive units departing the process. And the flow rate was the
rate at which units are departing the system. Notice that the flow rate is always going to be equal to one
divided by the cycle time. We also defined the flow time or throughput time, and this is the time it takes
a flow unit to go through the entire process.
Image - Slide 25
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Flow rate: leaving every hour
Flow time: entire process takes 25 minutes
Transcript
Now, if you were to look at this 25 minutes that if took for the car to go through, we might want to know
what was going on for 25 minutes? So let's see what happens inside this car wash. We have a Pre-Rinse
area, we have a Scrubbing area, we have a Rinse, we have a Wax and then we have a Dry. While the car
is going through this process, the driver has to get out and the driver has to sign a waiver so that any
damage to the car is not the responsibility of the car wash people and then the driver goes and has a cup
of coffee. Then they go and pay but all of that requires only 11 minutes. And so then they have to wait.
So now we have, a car comes in and it breaks up into two parallel activities. In one activity the car is
actually going through the wash. In the other case the driver is going through some steps before the two
join together and they leave. Now, in this particular case when we have to calculate the flow time, even
though there's a lot of activities that going on, some of these activities are in parallel. And so to find the
flow time, we look for the longest path of any of the split units that we have. So in this particular case
the longest path still remains 25 minutes, even though we had the driver had to get out and do some
extra activities. But they were being done while the car was being washed. And so there is no difference
in the flow time.
Process Flow Metrics 2 - Slide 26
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Flow time or throughput time

The time it takes a flow unit to go through the entire process - from the time it enters to the time it
departs the process
What if there are parallel activities?

Flow time is the time for the longest path from start to finish
Transcript
So what happens now? If we start thinking in terms of the same definitions of flow time, flow rate, and
throughput time. If instead of looking at it from the entire process, if you start looking at it for each
individual activity inside of the process.
At the activity level - Slide 27
Flow rate, cycle time and flow time can be defined for any contiguous sub-process we want to study
down to an individual activity
For an individual activity the cycle time is simply the processing time for that activity if one flow unit is
worked on at a time
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Transcript
Now, remember that as a process, we can think of any subset of these activities, as long as they are
contiguous, one after the other, and we could think of that as a sub-process, and then study it as a
process. And so anything that we've said about the entire process would apply to the sub-process. And
since a single activity is a special case of a sub-process, anything that we've said for the entire process
also applies for the activity. So for an individual activity, the cycle time is simply the processing time for
that activity. Similarly, the flow rate is one over the processing time or one over the cycle time for that
activity. So the definitions carry over when we look at them from an activity point of view.
Multiple Stations - Slide 28
What if we have Multiple stations doing the same activity?
Suppose we decide to have two interior cleaning stations at Black Box Carwash so two cars can be
worked on at the same time
The processing time for interior cleaning still remains the same (10 minutes) but now there are
two cars completed every 10 minutes. So the cycle time for the activity is:
(10 mins/2persons) = 5 mins
The flow rate = 1/CT = 1/5 = 0.2 cars/minutes
In general, Cycle time of an activity = Processing time/number of stations
Transcript
Now, what happens if you have more than one station which does the same activity? So for an example,
in our car wash, we had a drying station and the drying station was taking quite a bit of time, it was
taking 10 minutes. What if you decide to have two drying stations? Now, things are a little different
because in the 10 minutes that it takes to drive the car, since there are two people working on two cars at
the same time, we could have two cars coming out at the end of 10 minutes. Accordingly, our flow rate
is going to be double. So that instead of having 6 cars come out of this station, we are going to have 12
cars coming out of this station. So I can think in terms of, for this particular activity, I can think in terms
of a cycle time of 5 minutes, because for every 10 minutes, I get 2 cars, and so that's 5 minutes. And if I
look at the flow rate that's 1 over the cycle time. So that becomes 1 over 5 which 0.2 cars per minute. So
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in general when we think of cycle time of an activity is the processing time divided by the number of
stations. And if I think of the flow rate, it will be 1 over the cycle time. The flow time of the activity,
however, doesn't change. The flow time is still 10 minutes, because any single car coming into this
activity, when it leaves that activity, will still take 10 minutes to go on. So the flow time doesn't change
but the flow rate does change, and the cycle time changes.
Multiple Stations 2 - Slide 29
A special case of multiple stations occurs when many flow units are processed at the same time
Consider baking a batch of 50 cookies in an oven for 20 minutes

The processing time of the activity is 20 minutes but since we get 50 cookies every 20 minutes the
cycle time is (20 minutes/ 50 cookies) = 0.4 mins/cookie and the flow rate is 1/0.4 = 2.5
cookies/min
Transcript
A very special case of multiple stations is when we think of batch processing. So suppose we had to
bake 50 cookies, and we have to bake 50 cookies at a time in the oven for 20 minutes. Not being a cook,
I'm not sure whether 20 minutes is too long or too short. I might end up burning them to a crisp, but
suppose that happens. So I have 50 cookies in 20 minutes, so if I now what to think in terms of the cycle
times, I have 20 minutes, in that 20 minutes I get 50 cookies, so 20 divided by 50 is 0.4 minutes per
cookie. And the flow rate then is the reciprocal of the cycle time, which is 1 over 0.4, or I'm getting 2.5
cookies per minute.
Bottleneck Activity - Slide 30
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Each activity has an associated flow rate and cycle time
The activity with the smallest flow rate is called the bottleneck activity
Alternatively, the bottleneck is the activity with the longest cycle time
If there are multiple such activities then they are all bottleneck activities
Transcript
Once we've looked at all the activities. What we will notice is that certain activities have larger cycle
times than other activities. Or in other words, they may have smaller flow rates than other activities. The
activity which has the smallest flow rate is called the Bottleneck Activity. Similarly if it has the longest
cycle time, we'll call it a bottleneck activity. And since they are reciprocals of each other it's always
means the same thing. Now, it's possible that there are multiple such activities in our process which have
the largest time and in which case all of them will be called bottleneck activities.
Example - Slide 31
Job applicants for a warehouse position have to undergo a medical examination as shown below.
Activity process times (PT) and number of parallel stations (m) are shown next to each activity.
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Job application process is shown as a flow chart which consists of 8 steps. These 8 steps with their
processing times and parallel stations are as follows
1. Check in, 12 minutes, m=3

2. Give sample, 8 minutes, m=2
3. Sample test, 15 minutes, m=2
4. Result entry, 5 minutes, m=1
5. Check Vitals, 10 minutes, m=1
6. Data entry, 4 minutes, m=1
7. Physician, 10 minutes, m=1
8. HR Specialist, 15 minutes, m=2
Activity 1 is followed by Activity 2 at which point there are two parallel sets of activities – activity 3
and 4 on one path, and activity 5 and 6 on the second path. The two paths merge at activity 7 which is
followed by activity 8.
Transcript
Let's take an example, in this example, job applicants are coming for a warehouse position and they have
to undergo a medical examination as shown in the figure. There are several different steps in this
medical examination. In fact, there are eight steps starting with check in, then they go on and give a fluid
sample. The fluid sample is sent for testing. The applicant himself or herself has to then go on and be
physically evaluated. Then they go and see a physician. At which point the physician has all the
evaluation of the applicant as well as of the food samples. And then they finally go and see the HR
specialist to find out if they've actually passed the medical examination. So if I look at each step, each
step has a certain amount of time that it takes for a flow unit, in this case an applicant, to complete that
particular step. And there may be multiple stations for that step. So check-in takes 12 minutes for an
applicant but there are 3 check-in stations. The next step, which is giving the sample, takes a smaller
amount of time, 8 minutes, but there are 2 stations at this particular location.
Example Activity Metrics - Slide 32
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Below this is a table that shows the calculations for flow rate and cycle time.
Example Activity Metrics - Slide 45

1 2 3 4 5 6 7 8
PT 12 8 15 5 10 4 10 15
m 3 2 2 1 1 1 1 2
Flow rate=m/PT 3/12=0.25 2/8=0.25 2/15=0.133 1/5=0.2 1/10=0.1 1/4=0.25 1/10=0.1 2/15=0.133
Cycle time 4 4 7.5 5 10 4 10 7.5
Transcript
So given such a system, let's go ahead and figure out what are the performance metrics are? Let's start
out by looking at each activity and figuring out what the activity metrics are? So if you look at the figure,
you will see that we have the processing times each of the activities, and we have the number of parallel
stations for that activity. So m represents those number of parallel stations. Now, we can calculate for
each one of them the flow rate and cycle time. Let's take station 1. For station 1 there are 3 parallel
stations and it takes 12 minutes of processing time. So the flow rate is is m divided by PT, which is three
divided by 12 or 0.25. Since the cycle time is the reciprocal of the flow rate, the reciprocal of 1 over 0.25
happens to be 4, and so that's the cycle time. We can similarly calculate activity 2, activity 3, etc, and we
can calculate their flow rates and cycle times. Notice that activities 5 and 7 have a cycle time of 10
minutes each. They have a flow rate correspondingly of 0.1. So they have this slowest flow rate and the
largest cycle time. So activities 5 and 7 we will call our bottleneck activities. Once we've identified our
bottleneck, it's very easy to figure out what the process metrics are. So we have the activity metrics, we
now can figure out what the process metrics are. The bottleneck activities we said were activities 5 and
7. And so the process cycle time is the same as the cycle time of the bottleneck activity. And so the
process cycle time in this case, then is 10 minutes, and the process flow rate is 1/10 applicants per
minute. What's the flow time for this particular operation?
Example Process Metrics - Slide 33
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Based on the activity cycle times, Activities 5 and 7 are bottleneck activities. The process cycle time is
therefore 10 minutes.
The longest path is indicated in red below. The sum of processing times on the longest path is the flow
time

Longest path is through activities, 1,2,3,4,7 and 8. After adding the processing times of activities of
longest path, we get 65 minutes.
Transcript
So if we look at this particular process as a whole we can look for the longest path through this process.
So if you look at activities 1, 2, 3, 4, 7, and 8, then if you add up the processing times of those activities
we get 65 minutes. That is the longest path through this particular process. And so the flow time for this
particular process is 65 minutes. This says, that an applicant who enters the process will take 65 minutes
to complete this particular process. This is an easy way for us to now analyze any operation to figure out
the rate at which the process produces a product or produces service, and the time it's going to take for a
flow unit to go through the entire process. So by dividing it into activities, by studying each activity
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individually, and then looking at bottleneck activities, we are now able to figure out how much time it
will take to run this particular process.
Lesson 1-3
Lesson 1-3.1 Capacity and Utilization
You will learn about
Process capacity calculation

Capacity ctilization
Batch size to meet demand
Inventory consequences of batching
Little's Law
Transcript
In this lesson, we are going to talk about Capacity Utilization. So, we will talk about, process capacity
calculations, the difference between capacity and implied capacity utilization, and then also look at how
we have to think about capacity for continuous flow processes.
Activity Capacity - Slide 35
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Recall:
In lesson 1.2 we defined cycle time of an activity as

Cycle Time = Processing Time/(number of parallel stations) and
Flow Rate = 1/Cycle Time
Thus, the activity is capable of producing the flow rate. We define this as the capacity of the
activity.
Transcript
If you can recall, we talked about an activity having a cycle time, and a flow rate. The cycle time for that
activity, was the processing time divided by the number of parallel stations, and the flow Rate was its
reciprocal, the number of parallel units divided by the processing time. So, therefore, if I think of an
activity, every unit of time the activity outputs a number of units, that is equal to the flow rate. So, if the
flow rate is 10 per hour, that means every hour, 10 units are produced. This is what we defined as the
capacity. So, the capacity of that activity is equal to its flow rate.
Setup Times and Activity Capacity - Slide 36
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Consider an oven in which metal parts are heat treated. A batch of 50 parts are treated each time for 60
minutes but in takes 20 minutes between each batch to cool and reheat the oven. What is the capacity of
the oven?
Each oven cycle is 80 minutes long - 60 minutes of heat treatment followed by 20 minutes of cooling
and reheating for the next batch. In each cycle we produce 50 parts.
Flow rate = 50/80 = 0.625 parts/minute or 37.5 parts/hour
Transcript
Now, let's look at calculating this capacity in a slightly more complicated situation. Consider, that we
have metal parts that have to be treated in an hour. At a time we can take 50 of these parts, and put them
in the oven, and we have to then run the oven for 60 minutes. After we are done, it takes about 20
minutes for the oven to cool down, between batches so we can take the parts out and put the next batch
of parts in. So, what's the capacity of the oven? So in this particular case, we have a oven cycle, which is
60 minutes of heat treatment followed by 20 minutes of cooling and reheating for the next batch. So,
that's 60 plus 20 is 80 minutes. During those 80 minutes we produce 50 parts, so the flow rate is 50 parts
every 80 minutes, or 0.625 parts per minute, or 37.5 parts per hour. Now, what's the flow time for this
example? right? So, we had 60 minutes of heat treatment time, plus 20 minutes of heating and cooling.
So, a batch of 50 parts coming in, has to go through two 60 minutes of heat treatment every one of those
parts has to go through that, but they also have to wait for those 20 minutes while the oven is being
reheated or cooled.
Setup Times and Activity Capacity 2 - Slide 37
Effective Flow Time = Processing Time + waiting times

= 60 minutes + 20 minutes
= 80 minutes
Transcript
So, therefore, every part has to spend 80 minutes in the process, and so there effective flow time for this
particular process, is the processing time plus waiting time equal to 80 minutes. So, we call this the
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effective flow time to distinguish the fact that we have the waiting time as part of this process.
Theoretical vs Effective Metrics - Slide 38
It is common to qualify our performance metrics to distinguish when waiting times are included or not
included
Theoretical vs Effective Metrics - Slide 38

Without waiting With waiting
Theoretical Flow Time Effective Flow Time
Theoretical Flow Rate Effective Flow Rate
Theoretical Cyle Time Effective Cycle Time
Transcript
Usually, different authors and different textbooks, will choose to specify one or the other, they may call
the flow time, flow rate, and cycle time without waiting, as being theoretical, and other times they will
call it that as being effective, if waiting is being considered. Now waiting may occur for a variety of
different reasons, it may occur because of process variations, because of quality issues, because of
process failures, regardless of what it is. So, the effective flow time, effective flow rate, and effective
cycle time are typically what we observe in real life. The theoreticals are what we think ought to be
happening, if it will not take some of these other factors into account.
Process Capacity - Slide 39
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The capacity of a process is equal to the capacity of its bottleneck activity
Example:
1:6mins, 2:5mins, 3:8mins, 4:4mins
Process Capacity - Slide 39

Activity 1 2 3 4
Flowrate 10/hr 12/hr 7.5/hr 15/hr
Activity 3 is the bottleneck
Process capacity is 7.5/hr
Transcript
So, just as we had flow rates, flow times, and cycle times for individual activities, we also have them for
the process. So, similarly, we now should be talking about process capacity based on activity capacity.
For this once again, we look at the bottleneck activity, and the capacity of our process is the capacity of
our bottleneck activity. Consider the following example, in which we have four activities. In these four
activities, we have activity one, two, three, and four, and each of them have a different processing time.
Based on their processing time, we can calculate the flow rate. So, for example, activity one take six
minutes, and so therefore, the flow rate is 10 per hour. Activity two takes five minutes so it's 12 per hour,
and so on so forth. If I look at the flow rates now, the slowest of the flow rates, the smallest of the flow
rates is 7.5 per hour, which is activity three. So, activity three is our bottleneck, and because it's the
bottleneck, it decides what's the flow rate for the entire process and so in this particular case, our process
flow rate and our process capacity is 7.5 per hour.
Capacity Utilization (1 of 5) - Slide 40
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The presence of a bottleneck activity means that other activities will be idle for some of the time
How much of an activity's capacity is being utilized?
Transcript
Now, when we have different activities with different flow rates and different capacities, some activities
are going to be used all the time, while other activities will only be used part of the time. How do we go
about calculating what is the utilization of the resources assigned to a particular activity?
We can calculate it two different ways
Utilization = Actual Production Rate/Available Capacity or Utilization = Time Used for

Production/Available Time
Transcript
So, let's look at our example, we will calculate utilization for those activities one of two ways. We will
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calculate utilization as either the actual production rate, divided by the available capacity at that
particular activity, or we'll calculate utilization, as the time used for production at that particular activity,
divided by the available time and for that activity.
Utilization = Actual Production Rate/Available Capacity
The process capacity (7.5/hr) is the actual production rate
Capacity Utilization - Slide 42

Activity 1 2 3 4
Capacity 10/hr 12/hr 7.5/hr 15/hr
%Utilization 75 62.5 100 50
Transcript
So, let's go to our example, we had four activities and each of those activities had different capacities.
Earlier we calculated those capacities to be 10 per hour for activity one, 12 activity two, seven and a half
for three, and 15 for four. Based on the bottleneck of three we have seven and a half hours as the process
capacity. This means that the process is going to be producing at seven and a half units per hour.
However, if I look at activity one, activity one is capable of producing at 10 per hour. Therefore, the
utilization for activity one is going to be 7.5 per hour which is the actual production rate, divided by the
available capacity which is 10. So, 7.5 divided by 10 becomes 0.75, or expressed as a percent, 75
percent. We can similarly calculate activity two, which has a available capacity of 12, the production
rate is 7.5. So, 7.5 divided by 12, becomes 62.5. The bottleneck activity, activity three is obviously going
to be utilized 100 percent of the time.
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Utilization is always between 0 and 1. Or expressed as a percent, between 0 and 100%
The bottleneck process has 100% utilization
Transcript
So, if you think in terms of utilization, utilization is always between zero or one, or if I expresses it as a
percent, it is between zero and 100 percent. Notice that bottleneck processes are always at 100 percent
utilization.
Utilization = Time Used for Production/Available Capacity
The process capacity (7.5/hr) is the actual production rate
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Capacity Utilization - Slide 44

Activity 1 2 3 4
%Utilization 75 62.5 100 50
Transcript
Let's look at a different way to calculate this particular example and for this we'll use the second
formula. We know in this example that we are able to produce seven and a half units per hour, so if I
look at activity one, the process time at activity one is six minutes. So, therefore, to produce seven and a
half units, I need six multiplied by seven and a half, which is 45 minutes. But during the hour, I have this
activity is available for 60 minutes. So, therefore, I'm only using 45 minutes of the 60, so 45 divided by
60 is 0.75, or 75 percent. So, the utilization is again 75 percent. So, this is just an alternate way to do the
calculation, you should get exactly the same numbers doing it either way.
Garment Example (1 of 2) - Slide 45
Garment manufacturing is a multistep process as shown in the process flow diagram below. The table
indicates the batch size and batch processing time for each step
1:fabric cutting, 2:sleeve stitching, 3:body stitching, 4:garment assembly, 5:fastener assembly
Garment Example - Slide 45

Activity Process Time Batch Size
1 5 mins 24
2 6 mins 1
3 4 mins 1
4 5 mins 1
5 3 mins 1
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Transcript
Let's do one other example, and in this case we're going to have one of the activities doing a batch
process. This is a garment manufacturing in example, where we are cutting fabric as the first step. Pieces
of fabric are taken to make sleeves of the garment, the rest of the pieces of fabric are taken to make the
body of the garment, they are assembled together in the garment assembly, and then fasteners which
might be buttons or zippers are applied in step five. When you cut the fabric, you're able to cut enough
for 24 garments at a time. So, this is a batch process. Now, how do we go about calculating this
capacity?
Garment Example (2 of 2) - Slide 46
1:fabric cutting, 2:sleeve stitching, 3:body stitching, 4:garment assembly, 5:fastener assembly
Garment Example - Slide 46

Activity Process Time Batch Size Flow Rate % Utilization
1 5 mins 24 4.8 3.47
2 6 mins 1 1/6 100
3 4 mins 1 1/4 66.67
4 5 mins 1 1/5 83.33
5 3 mins 1 1/3 50
Process Capacity = 1/6 per minute
Transcript
So, let's look at the calculation for each one of these activities. So, if I look at Activity 1, Activity 1 takes
five minutes, but during those five minutes, I cut enough fabric for 24 garments. Therefore, my flow rate
is going to be 24 divided by 5, which is 4.8. If I look at Activity 2, it takes six minutes, but I only do one
thing at a time. So, therefore, the flow rate is going to be 1 divided by 6 or one-sixth. So, I can calculate
for each of them. Notice that Activity 2 has the smallest flow rate, one-sixth. So, that's my bottleneck
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activity. It's going to dictate the rate at which production occurs in this particular process. Let's calculate
the utilization for each of those activities. So, if I look at the first activity, then I have a process capacity
of one-sixth per minute. So, that's the rate at which the actual production is going to occur, but this
particular activity is capable of producing 4.8 garments per minute. So, therefore, the utilization is going
to be one-sixth divided by 4.8, which is equal to 0.0347 or 3.47 percent. So, Activity 1 is only utilized
3.47 percent. Similarly, I can calculate the others. Notice once again that the bottleneck activity, which
was Activity 2, has 100 percent utilization.
Implied Utilization - Slide 47
What if the demand is less or more than the process flow rate?
In this case we define

Implied Utilization = Demand Rate/Available Capacity
If the demand rate is higher than the available capacity then Implied Utilization will be greater than
100%
Transcript
Now, what happens if the rate at which customers demand my product is different than what I can
actually produce? So, it's possible that the customers are demanding at a rate much higher than what I
can produce or lower than what I can produce. In this case, I can go and calculate the demand that is
being put on each of the activities, and I call this my implied utilization. So, if the demand is much
higher than a particular activity is able to produce, then I will have an implied utilization that is greater
than 100 percent. This tells me that this activity needs more resources. Otherwise, we cannot meet
demand.
Example - Slide 48
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Suppose the customer demand is 8 unites per hour
Implied Utilization = Demand Rate/Available Capacity
Example - Slide 48
Activity 1 2 3 4
%Implied Utilization 80 66.67 106.67 53.33
Transcript
Let's look at our example again. In this example, let's say that the customer demand is eight units per
hour. So, with eight units per hour, my implied utilization is calculated as the demand rate, the rate at
which customers are demanding the product, divided by the available capacity. If I now go and calculate
each of the activities, let's focus, for example, on Activity 3. Activity 3 is capable of producing 7.5 per
hour, but the demand rate happens to be eight per hour. So, the implied utilization of activity three is 8
divided by 7.5 or 106.67 percent. Notice that the implied utilization in this case is higher than 100. So, if
you see, for example, implied utilization is being higher, you know that the process that you have is not
capable of producing or keeping up with the demand for those items.
Capacity in a Continuous Flow Process - Slide 49
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Process is continuous without any intermediate inventories
Nozzle cleaning takes 30 minutes
Flow rate: Puffer-800lbs/hr, Sparyer-900lbs/hr, Packer-1000lbs/hr
Transcript
So, let's take a slightly different example. In this example, we are going to be looking at a continuous
flow process. We have a cereal manufacturing plant which has three activities. There's a puffer, a
sprayer, and a packer. The puffer takes grain and pass it up into puffed rice like rice crispies, for
example, which then gets transferred to the sprayer, and the sprayer spray some honey syrup on them.
There are nozzles in the sprayer which are doing this. The grain is then taken to the packer, where it is
package. Now, this entire process is occurring as a continuous stream so that the product doesn't wait
anywhere in between. Now, the puffer is capable of producing at 800 pounds per hour, the sprayer is
capable of producing at 900 pounds per hour, and the packer is capable of producing at 1,000 pounds per
hour. Unfortunately, the sprayer has a problem. After running for a little while, the spray nozzle start
getting clogged. So, the process has to be run for three hours, the screening process, and then for 30
minutes, it has to be stopped so the nozzles can be cleaned before you start the process again.
Capacity in CFP (1 of 2) - Slide 50
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Flow rate: Puffer-800lbs/hr, Sparyer-900lbs/hr, Packer-1000lbs/hr
Consider each cycle of spraying and nozzle cleaning. Each cycle is 3.5 hrs (3 hrs spraying and 0.5 hr for
cleaning).
Transcript
Notice something about this process. Because we have no place to keep any inventory, the output from
the puffer goes directly into the sprayer and the output from the sprayer goes directly into the packer.
During the time that we actually stop the sprayer, both the puffer and the packer also have to be stopped.
With this in mind, let's go and figure out what is the capacity of this process. So, if we now look at this
process, we have three steps in our process and each of these steps is going to have a three and a half
hours cycle. The cycle is three hours of spraying for the sprayer and half hour of cleaning for the
sprayer, during which, for three hours, all three of them are going to be producing and during the half
hour, all three of them are going to be stopped.
Capacity in CFP (2 of 2) - Slide 51
During this cycle

Puffer Sprayer Packer
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Amount produced (lbs) 3*800=2400 3*900-2700 3*1000=3000

Effective flowrate 2400/3.5=685.71 2700/3.5=771.43 3000/3.5=857.14
The puffer is the bottleneck activity and controls the flow rate, so the line can only produce 685.71 lbs/hr
Transcript
So, let's calculate what happens at the puffer. At the puffer, we are going to have three hours of
production at the rate of 800 pounds per hour, which is 2,400 pounds are going to be produced. The
sprayer during that time is capable of producing 3 times 900 or 2,700, and the packer is capable of
producing 3 times 1,000, equals 3,000, for the three-hour period. But what's the flow rate? At the puffer,
we are producing 2,400 pounds in three and a half hours. That's equal to 685.71 pounds per hour. At the
sprayer, we are producing 2,700 pounds in the three and a half hours. That turns out to be 771.43
pounds. At the packer, by the same kind of calculation, we produced 857.14. Looking at those three, we
now notice that the flow rate is smallest for the puffer. So, therefore, the entire process can only produce
at 685.71 pounds per hour. Notice the key thing here is that because one of these processes had to be
stopped, all processes had to be stopped. This is not always the case with all continuous flow processes.
Sometimes it's possible to take the output of, say, the puffer and store it somewhere else and then bring it
back into the sprayer when the sprayer starts again. But this is a special case where we have a
continuous flow through the entire process, and therefore, we have to consider the fact that the sprayer
stoppage means a stoppage at both the puffer and the packer.
Summary - Slide 52
In this lesson we learned about
Process capacity calculations under different scenarios

Capacity utilization
Implied capacity utilization
Capacity calculation for Continuous flow processes
Transcript
45 of 53 10/22/18, 3:24 PM
So, what we've learned in this lesson is how do we go about doing capacity calculations for processes
under different scenarios. We looked at the utilization of different activities, the capacity utilization. We
introduced the notion of an implied capacity utilization based on the customer demand rate. Finally, we
looked at some specific issues that may arise in capacity calculations for continuous flow processes.
Lesson 1-4
Lesson 1-4.1 Little’s Law
In this lesson we will learn about Little's Law
Transcript
In this lesson, we will learn about the relationship between some of the performance metrics that we
have looked at before. In particular, we'll look at flow time, flow rate and the inventory in the system.
This relation is called Little's law. Before I introduce the law, let me give you a little intuition of what's
going on.
Image - Slide 54
46 of 53 10/22/18, 3:24 PM
Flow rate: leaving every hour
Flow time: entire process takes 25 minutes
Transcript
Let's go back to our car wash and if you recall, we had this brown car that came in brown looking car
that came in and then it came out looking nice and shiny red. After all the dirt and grime was removed. It
took 25 minutes for this car to go through the entire car wash process. Now, a couple of things that we
should keep in mind about this car wash. We looked at the car's coming out and the cars were coming
out at the rate of one every 10 minutes. Now obviously, cars must have been coming in to the car wash
at a rate of one every 10 minutes because if not, if they were coming in at any rate faster than that.
There'll be a huge pile up of cars eventually and since cars are coming in and going out at a steady pace.
We know that that's not the case, and if they had been coming in at a rate slower than the rate at which
they were going out, we would have to manufacture cars inside of the car wash. So, it must be true that
the rate at which cars are coming in must be the rate at which cars are going out. Now, if we look at this
process over a period of time. We said that it takes about a car coming out every 10 minutes or six cars
coming out every hour. So now, when the red car comes in, it goes through the process and it takes 25
minutes to come out. When it comes out, the driver turns around to see how many cars there are in the
car wash. Now notice, that in the 25 minutes, cars have been coming in. What's the rate that the cars
have been coming in? It's the same rate at which the cars have been going out and that rate was six per
hour or one every 10 minutes. So, the rate has been one-tenth of a minute. So, in 25 minutes, we have 25
times one over ten which is 2.5 cars in the system. So, during 25 minutes which is the flow time
multiplied by one-tenth which is the flow rate, gives me the number of cars in the system which is the
inventory.
Little's Law - Slide 55
47 of 53 10/22/18, 3:24 PM
Little's Law was first proposed by John D.C. Little in 1964 in the context of Queueing Theory.
Transcript
So, it's a relatively simple idea of course, to prove it for all kinds of cases takes a little bit of work and
this work was originally done by Professor John D.C Little in 1964 in the context of what is known as
Queueing Theory. Since then, it has been adapted and popularized in operations management because
one can always look at most operations or most processes as some form of queuing networks. Since that
law applies to queuing theory, we can now apply it to our processes and our operations.
Assumptions - Slide 56
Little's Law applies to
Systems in steady state

Rate of arrival = Rate of departure
Average values of metrics being considered
Transcript
48 of 53 10/22/18, 3:24 PM
So, Little's Law applies to systems that are in steady-state. We want the rate of arrival to be equal to the
rate of departure, and we are interested in what happens on average rather than what happens in a
momentary period of time. So, what's this famous Little's Law?
Little's Law - Slide 57
Suppose we represent
I = Inventory
R = Flow rate
T = Flow time
Little's Law says that I = R × T
Transcript
Little's law relates the inventory or the number of flow units in the system, to the flow rate and the flow
time. It states that inventory in the system must be equal to the flow rate times the flow time. A relatively
simple looking equation but it has a lot of power, because if I know two of those quantities the flow rate
and flow time, I should be able to tell you what the inventories. So if you recall from the car example, I
knew that the flow rate was one over ten. I knew that the flow time was 25. I was able to calculate the
fact that there will be two and a half cars in my car wash. Let's look at an example.
Example 2 - Slide 58
49 of 53 10/22/18, 3:24 PM

Consider the examination process example
We calculated the flow time for the process as 65 mins and the flow rate as 1/10 applicants/minutes
From Little's Law the average number of applicants in the system
I=R*T=65*0.1=6.5 applicants
Transcript
Let's go back to an example from an earlier lesson, which was Warehouse applicants were to go to a
medical examination. In this particular example, we had eight steps in the process and we had calculated
that there was a flow time of 65 minutes. We had also calculated that the flow rate in this process was
one over ten applicants per minute. Now, applying Little's Law, we can figure out how many applicants
are in the process on average. So, inventory is equal to rate multiplied by flow time, rate happens to be
0.1 multiplied by 65, is equal to 6.5 applicants. So, I'm now able to specify how many applicants there
are in the process on average.
Example - Slide 59
50 of 53 10/22/18, 3:24 PM
Activity 1: flowrate 10/hr, activity 2: flowrate 12/hr, activity 3: flowrate 7.5/hr, activity 4: flowrate 15/hr
Based on the given data, the process has an average flow rate of 7.5 units/hr and has a flow time
(6+8+4)=18mins=18/60 hours=0.3 hours
Then from Little's Law, the inventory, (i.e., the average number of units in the system)
I=R*T=7.5*0.3=2.25 units
Transcript
Let's take a different example. In this case, we have four activities in the process. Our flow rate happens
to be seven and a half per hour. So, we have seven and a half units per hour. We have a flow time based
on the longest path of 18 minutes or 0.3 hours. Using Little's Law again, the rate is 7.5 multiplied by
time 0.3 tells us that we are going to have 2.25 units in the system.
Adding Capacity - Slide 60
51 of 53 10/22/18, 3:24 PM
Consider adding an extra resource to Activity 3 as shown. This will change the flowrate for Activity 3
and so the new bottleneck will be Activity 1. The flow rate for the process will be 10/hr
The flowtime will continue to be 18 minutes or 0.3 hours.
From Little's Law: I=R*T=10*0.3=3 units
Notice that increasing the resources at Activity 3 increased the flow rate so the number of units in the
system also increased.
Transcript
Let's make a small change to this example. Instead of having one station at activity three, let's have two
stations. So, M is now equal to two, which immediately means that the flow rate at activity three has
increased to 15 per hour. Now, the bottleneck is activity one and so my flow rate is 10 per hour. The flow
time does not change because every unit still has to go through the process and it takes 18 minutes to go
through the process. So 18 minutes or 0.3 hours. Once again we apply Little's Law and it tells us that the
number of units in the system is going to be 10 multiplied by 0.3 or three units. So, by adding an extra
resource. We have now increased the rate at which units are flowing through the system and so we have
extra inventory in the system.
Summary - Slide 61
Little's Law allows us to relate three important performance metrics:
Flow Rate
Flow Time
Inventory
Transcript
In summary then, Little's Law connects three important performance metrics; the flow time, the flow rate
52 of 53 10/22/18, 3:24 PM
and the inventory and it allows us to calculate one if you know any two of those three quantities.
53 of 53 10/22/18, 3:24 PM

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Operations Management: Analysis and Improvement Methods Mo... file:///Users/sujinyou/Downloads/BADM 567 Operations Manage...

Operations Management: Analysis and

Operations are composed of a collection of activities that are

To perform activities, operations need resources

Process View - Slide 2

the outputs can be products or services

Process Flow Units - Slide 3

The basic unit of flow at which we wish to study a process

Process Representation - Slide 4

Processes can be represented as a connected network of activities

Squares represent activities

Process representation is shown as a flow chart. Order of the flow chart is

Small Medical Units - Slide 5

Process in small medical units

Medical Units with Emergency Care - Slide 6

Process in medical units with emergency care

Emergency care unit is shown with the following stations in a hospital

Medical Units with Pregnancy Care - Slide 7

Process in medical units with Pregnancy care

Pregnancy care unit is shown with the following units in a hospital

Product Focused Operations - Slide 8

Process Focused Operations - Slide 9

Similar skills or technologies are grouped together in specialized departments

Layout Characterization - Slide 10

Getting your food at Chipotle

Jumbled or Job-Shop - Flow unite may have different sequence of activities

Lesson 1-1.2 Process View of Operations (part 2)

Reasons for Batching - Slide 13

Shared Resource with Changeover

Types of Linear Flow - Slide 14

Large Batch vs Small Batch vs Single-Unit

Discrete vs Continuous Flow

Unpaced vs Worker-Paced vs Automated pacing

Types of Linear Flow (1 of 2) - Slide 15

Unpaced vs Woker-Paced vs Automated pacing

Types of Linear Flow (2 of 2) - Slide 16

Large Batch va Small Batch va Signle-Unit

Discrete vs Continuous Flow

Unpaced vs Woker-Paced vs Automated pacing

Process Type Selection - Slide 17

Which process type should one choose?

Product-Process Matrix (1 of 2) - Slide 18

comes the line layout, and finally the continuous layout.

Product-Process Matrix (2 of 2) - Slide 19

Process view of operations

Process flow types

Process type selection

Cycle time: leaving every 10 minutes

Flow Rate: leaving every hour

Cycle time: leaving every 10 minutes

Flow Time: 25 minutes

Process Flow Metrics - Slide 24

Rate at which units depart the system

Cycle time: leaving every 10 minutes

Flow rate: leaving every hour

Flow time: entire process takes 25 minutes

Process Flow Metrics 2 - Slide 26

Flow time or throughput time

What if there are parallel activities?

At the activity level - Slide 27

Multiple Stations - Slide 28

What if we have Multiple stations doing the same activity?

In general, Cycle time of an activity = Processing time/number of stations

Amount produced (lbs) 3800=2400 3900-2700 3*1000=3000