Operations Management

Little’s Law:
Average inventory = Average flow rate × Average flow time
N= λ×W
Throughput time = Work-in-process × Cycle time
Throughput Time 1
Cycle time = =
WIP Flow Rate
Inventory
Flow Time=¿
Flow Rate
1 COGS
Inventory Turns=¿ =
Flow Time Inventory
Annual inventory costs
Per−unit inventory costs=¿
Annual inventory turns
Work Content
Percentage throughput efficiency = × 100
Throughput Time
Process capacity = Minimum{Capacity of resource 1, . . . , Capacity of resource n}

Flow rate = Minimum{Available input, Demand, Process capacity}

Demand
Implied utilisation =
Capacity
ActualOutput
Efficiency=
Effective Capacity
Total Operating Time
Availability Rate =
Loading Time
X
Tim to fulfill X units =
Fow Rate
Number of Resources
Capacity =
Processing Time
Time through an empty worker-paced process = Sum of the processing times

Time through an empty machine-paced process = Number of resources in sequence × Processing time of the
bottleneck step

Time to finish X units starting with an empty system =

X−1 Unit
Time through an empty process +
Flow Rate
Time to finish X units with a continuous-flow process =
X Unit
Flow Rate
Total Wages per unit of time
Cost of direct labor =
Flow Rate per unit of time
Labor content∗Flow Rate
Average labor utilization =
Number of Workers

Swetha Venkatakrishnan
 Labor content
=
Labor content + ∑ of idle×across workers
Idle time across all workers at resource I
= Cycle time × (Number of workers at resource i ) - Processing time at resource i

Number of Workers
Requested capacity =
Activity Time
Standard Deviation of Interarrival Time
CVa =
Average Interarrival Time
Standard Deviation of Procesing Time
CVp =
Average Processing Time
For One resource:
Flow Time = Time in Queue + Processing Time ; T = Tq + p

2 2
Utilisation CV a +CV p )
Time in Queue = Processing Time x ( )x(
1−Utilisation 2
1
I= RxT = xT
a
q

For Multiple resources:

Flow Time = Time in Queue + Processing Time ; T = Tq + p

Time in Queue = Processing Time x (

Utilisation√ 2(m +1)−1 ) x ( CV a 2+CV p 2 )
1−Utilisation 2
Ip = m x u = Number of Resources x Utilisation (Inventory in Service)

Inventory in Queue = Iq = Tq / a

Inventory in the system = Ip + Iq

p
Utilisation = u =
a xm
𝜆 = 1/𝑡a = arrival rate ; 𝜇 = 1/𝑡s = service rate

Actual Output Flow Rate

Utilization = =
Design Capacity Capacity

1/ Interarrival Time
= (in case of multiple resources)
Number of Resources / ProcessingTime

Swetha Venkatakrishnan
 Capacity (given a batch size) = Batch ¿ ¿ Setup Time+ Batch ¿ ProcessingTime ¿
Processing Time ~ Time per unit
Unit : Capacity – Units/time

Swetha Venkatakrishnan