TUM School of Management

Production and Supply Chain Management

Prof Martin Grunow Technische Universität München

Kingman Equation
• Requirement: u must be less than 100%.
• Resource has enough capacity to meet the demand
– on average!

𝑢
𝑇𝑤𝑎𝑖𝑡 = 𝑝 × × 𝑣
(1 − 𝑢)
Processing Utilization Variability
Time Factor Factor
Factor

Holly Ott 9
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

• Processing time, p: Time it

takes for an activity to process
one flow unit.
• Resource Capacity = 1/p: The
maximum number of flow units
Assembly Sand Paint that an activity can process per
Raw 5 min/board 4 min/board 6 min/board Finished
unit of time.
Material Goods
• The activity with the smallest
resource capacity is called the
Resource Assembly Sand Paint Bottleneck.
p (min/board) 5 4 6 • Process Capacity = capacity of
the bottleneck.
Capacity 1/5 1/4 1/6
(boards/min) • Flow Rate = Process Capacity,
where we are assuming that we
Capacity 12 15 10
have enough raw materials and
(boards/hour) Bottleneck!
we can sell every skateboard we
Resource 10/12 = 10/15 = 10/10 = make.
Utilization 83% 67% 100% • Resource Utilization = Flow
Rate/Resource Capacity
• Resource Utilization cannot be
greater than 100%.
Holly Ott
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

• Processing time, p: Time it

takes for an activity to process
one flow unit.
• Resource Capacity = 1/p: The
maximum number of flow units
Assembly Sand Paint that an activity can process per
Raw 5 min/board 4 min/board 6 min/board Finished
unit of time.
Material Goods
• The activity with the smallest
resource capacity is called the
Resource Assembly Sand Paint Bottleneck.
p (min/board) 5 4 6 • Process Capacity = capacity of
the bottleneck.
Capacity 1/5 1/4 1/6
(boards/min) • Flow Rate = minimum of the
process capacity, the input rate,
Capacity 12 15 10
Bottleneck!
and the demand rate.
(boards/hour)
Resource
Utilization • Resource Utilization = Flow
Rate/Resource Capacity
• Resource Utilization cannot be
greater than 100%.
Holly Ott 11
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Demand is 8 skateboards/hr • Processing time, p: Time it

takes for an activity to process
one flow unit.
• Resource Capacity = 1/p: The
maximum number of flow units
Assembly Sand Paint that an activity can process per
Raw 5 min/board 4 min/board 6 min/board Finished
unit of time.
Material Goods
• The activity with the smallest
resource capacity is called the
Resource Assembly Sand Paint Bottleneck.
p (min/board) 5 4 6 • Process Capacity = capacity of
the bottleneck.
Capacity 1/5 1/4 1/6
(boards/min) • Flow Rate = minimum of the
process capacity, the input rate,
Capacity 12 15 10
Bottleneck!
and the demand rate.
(boards/hour)
Resource
Utilization • Resource Utilization = Flow
Rate/Resource Capacity
Flow Rate = min(process capacity, input rate, • Resource Utilization cannot be
demand rate) = 8 boards/hr greater than 100%.
Holly Ott 12
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Kingman Equation
𝑢
𝑇𝑤𝑎𝑖𝑡 = 𝑝 × × 𝑣
Demand is 8 skateboards/hr (1 − 𝑢)
Paint

Resource Assembly Sand Paint

Finished
Goods

p (min/board) 5 4 6
Capacity 1/5 1/4 1/6
(boards/min)
Capacity 12 15 10
(boards/hour) Bottleneck!

Resource
Utilization

Flow Rate = min(process capacity, input rate,

demand rate) = 8 boards/hr
Holly Ott 13
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

𝑢
Utilization Curve 𝑇𝑤𝑎𝑖𝑡 = 𝑝 ×
(1 − 𝑢)
× 𝑣

• Given that there is enough

capacity on average to meet
demand (capacity > demand
rate).
• With variability, there is an

𝑇𝑤𝑎𝑖𝑡
exponential increase in the
queue time (Twait) with
increasing capacity utilization.
• Roughly ~80% queues become
critical.
0% Utilization 100%

Holly Ott 14
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Reducing the Waiting Time

𝑢
• Reducing process time, p, through 𝑇𝑤𝑎𝑖𝑡 = 𝑝 × × 𝑣
(1 − 𝑢)
process improvement and elimination
of waste will reduce queuing. Processing Utilization Variability
Time Factor Factor
Factor

• Keep utilization as low as possible, to keep u/(1-u) as low as possible.

• Reduce arrival variation (e.g. scheduling slots/appointments) and processing
time variation (e.g. Standard Work)

Holly Ott 15
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Significance for Lean Production

𝑢 • Transportation
𝑇𝑤𝑎𝑖𝑡 = 𝑝 × × 𝑣
(1 − 𝑢)
• Inventory
• Motion
• Waiting
• Over-processing
• Overproduction
• Defects

Holly Ott 16
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Introducing Variability

Prof. Holly Ott

Production and Supply Chain Management
Chair: Prof. Martin Grunow
TUM School of Management

Holly Ott 17