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 1
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Learning Objectives
• Understand why there is variability in systems.
• Identify the components of the Kingman equation for
approximating waiting times: the processing time factor, the
utilization factor, and the variability factor.
• Use the Kingman Equation to calculate the average waiting time in
front of a resource.
• Explain why waiting times increase as resource utilization
increases in processes with variability.
• Understand and discuss the impact of variability in Lean
Production.

Holly Ott 2
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Little’s Law: I = RT

Insert Cut Sew

Raw Finished
Material 3 min/T-shirt 3 min/T-shirt 6 min/T-shirt Goods

Holly Ott 3
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Introducing Variability

https://commons.wikimedia.org/wiki/File%3ABowery_men_waiting_for_
bread_in_bread_line%2C_New_York_City%2C_Bain_Collection.jpgBy
Unnamed photographer for Bain News Service David Shapinsky [Public
domain], via Wikimedia Commons

Holly Ott 4
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Kingman, J. F. C.; Atiyah (October 1961). "The single server

queue in heavy traffic". Mathematical Proceedings of the

Kingman Equation Cambridge Philosophical Society. 57 (4): 902.

• Sir John Kingman, 1961 𝑢

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

• Approximation of the average waiting time for a single resource

with variability in the arrival of units to be processed (or served) and
with variability in processing times.

Holly Ott 5
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

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

p = average processing time for a resource

Resource Capacity = 1/p: The maximum number of flow units that
an activity can process per unit of time (one resource only)
u = Resource Utilization = Flow Rate/Resource Capacity
v = variability factor, measure of the variation in the arrival of units
to the resource and the variation in the processing times for the
resource
Holly Ott 6
 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
Assembly Sand Paint units that an activity can
Raw 5 min/board 4 min/board 6 min/board Finished
process per unit of time.
Material Goods
• The activity with the smallest
resource capacity is called
Resource Assembly Sand Paint the 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
Capacity 12 15 10
assuming that we have
(boards/hour) Bottleneck!
enough raw materials and we
Resource 10/12 = 10/15 = 10/10 = can sell every skateboard we
Utilization 83% 67% 100% make.
• Resource Utilization = Flow
Rate/Resource Capacity
• Resource Utilization cannot
Holly Ott be greater than 100%. 8
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Kingman Equation
𝑢
𝑇𝑤𝑎𝑖𝑡 =𝑝 × × 𝑣
(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 10/12 = 10/15 = 10/10 =

Utilization 83% 67% 100%

Holly Ott 8
 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