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COMM204 (Little's Law and Its Application)

Little's Law can be applied to analyze processes with multiple flow units or product types. When there are multiple products: 1) The unit load times for each resource must be determined for all product types. 2) The capacity rate depends on the product mix ratios being processed. 3) The bottleneck resource may change depending on the specific mix of products flowing through the process.

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Sahil Parekh
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51 views18 pages

COMM204 (Little's Law and Its Application)

Little's Law can be applied to analyze processes with multiple flow units or product types. When there are multiple products: 1) The unit load times for each resource must be determined for all product types. 2) The capacity rate depends on the product mix ratios being processed. 3) The bottleneck resource may change depending on the specific mix of products flowing through the process.

Uploaded by

Sahil Parekh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Process Flow Analysis:

More Examples on Little’s Law and


Multiple Flow Units
Introduction to Operations Management

Little’s Law
Average
throughput rate (R)
Average Inventory (I) [units/hr]
[units]
... ... ... ... ...

Average Flow Time (T)


[hrs]

(Average) Inventory = (Average) Throughput Rate * (Average) Flow Time

I=R*T
2
Little’s Law : Example 1

Would you join this line? 

3
Little’s Law : Example 1

4 customers in line on average

2 customers are served


What is the average waiting time in line? per minute on average

A) 2 minutes
B) 4 minutes
C) 8 minutes

4
Little’s Law : Example 1

Throughput rate, R: 2 customer/min


Inventory, I: 4 customers in the system
Flow time, T=?
inventory
Flow time =  = 2 minutes
throughput rate

I=R*T

5
Introduction to Operations Management

Little’s Law: Example 2

You are managing the construction of a new container terminal


at the Port of Vancouver. You expect to “process” 1000
contains/day, and you have promised customers that containers
will spend no more than 1 day waiting to be shipped.

INPUT
OUTPUT
Containers to be
Containers shipped
shipped

6
Introduction to Operations Management

Little’s Law: Example 2

On average, your container storage yard can hold 500


containers. Is your yard big enough?

R = 1000 containers/day
T =1 day

I = R*T =1000 containers -> No

7
Another Key Application of Little’s Law

Inventory Turnover

Thous a nd s of g ood s …

8
Inventory Turnover

When you visit the supermarket, you see


thousands of goods. It is a good thing for the
customer. Is it good for the super market?

A) Yes
B) No

9
Inventory Turnover

… but sitting inventory is idle money on the shelf!

10
Introduction to Operations Management
Inventory Turnover

•How quickly do you convert inventory to sales?

•You want to keep inventory on your shelves for as little time


as possible.
Inventory [$]

Cost of goods sold [$/year]


(Throughput)

Days of Inventory [days]


(Flow time)

Let us use Little’s Law!

13
Introduction to Operations Management
Days of Inventory & Inventory Turnover

Inventory [$]

Cost of goods sold [$/year]


(Throughput)

Days of Inventory [days]


(Flow time)

365  Inventory
Days of Inventory =
Cost of goods sold (Throughput)

Cost of goods sold (Throughput) 365


Inventory Turnover = =
Inventory Days of Inventory

This measures the speed of moving inventory.


14
Introduction to Operations Management
Days of Inventory & Inventory Turnover

Otto’s Auto Parts holds inventory for 2 months, on average.


What is the inventory turnover (in a year)?

A. 2
B. 6
C. 10
D. 12
E. None of the above

15
Inventory Turnover

14
Introduction to Operations Management

Multiple Flow Units

• Most organizations have to deal with multiple types of


customers or producing multiple types of products.
• An emergency department has multiple types of patients.
• A coffee shop or a restaurant have to prepare multiple items
on the menu. 
• How to perform process analysis when there are multiple
flow units?

5
Introduction to Operations Management
Process Analysis: Multiple Flow Units

Resource Unit Load (minutes/unit)


Product A Product B Product C
1 2.5 2.5 2.5
2 1.5 2 2.5
3 12 0 0
4 0 3 3
5 3 3 3

If you produce only Product A, what is capacity rate of the


process (per hour)? Which resource is the bottleneck?

6
Introduction to Operations Management
Process Analysis: Multiple Flow Units

Resource Unit Load (minutes/unit)


Product A Product B Product C
1 2.5 2.5 2.5
2 1.5 2 2.5
3 12 0 0
4 0 3 3
5 3 3 3

If your product mix is 1 unit of A, 2 units of B and 2 units


of C, what is your capacity rate? Bottleneck?

7
Process Analysis:
Introduction Multiple
to Operations Flow Units
Management

Activity Resource Unit Load (minutes/unit)


(Sandwich Product A Product B Product C 1A+2B+2C
shop)

Take order 1 2.5 2.5 2.5 12.5


Cheese/ 2 1.5 2 2.5 10.5
bread type
Grill? 3 12 0 0 12
Toppings? 4 0 3 3 12
Pack 5 3 3 3 15

When multiple flow units go through a process, the “product


mix” needs to be considered while determining the unit load of
the resources and the capacity rates.
The bottleneck depends on the product mix.

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