Process Flow Analysis

The Little’s Law

The Core Concept in Business
Processes Engineering

Eyes must be washed; to see things differently.

Sohrab Sepehri, Persian Poet, 1928 – 1980.
Recorded Lecture

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 2
Hour Zero

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Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 3
K1 . The Coffee Shop
 A manager of a local coffee shop near the Reseda and Plummer
intersection realized that during busy hours, the entrance door opens, on
average, once per minute, and a customer enters.
 In a stable system, if one customer enters per minute, one customer should
leave per minute. In the short run, we may have variations, but over a long
period, output cannot be less than input. Output should be equal to input.
 It is possible that in 5 minutes, 4 customers come in, and 7 customers go
out. However, over a long period (even a day), the output cannot exceed
input, because how can that difference be generated?
 On average, in 5 minutes, 5 customers enter and 5 customers leave.
 Similarly, the output cannot be less than input, because, over a long period,
there will be no room in the coffee shop (or even in a large stadium).
 It is possible that in 5 minutes, 9 customers come in and 6 customers go
out. However, over a full day, input cannot exceed output. Input should be
equal to output.
Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 4
K1 . The Coffee Shop
 In stable systems, flow units come in as input, leave the system as output,
and input per unit of time is equal to output per unit of time. If, on
average, one customer comes in per minute, then on average, one
customer should leave per minute.
a) What is the throughput (R) of the coffee shop?
Every minute, 1 customer enters and 1 customer leaves.
R= 1 per minute.
 Throughput is the average flow rate in a stable system (where the
average input is equal to average output over an extended period).
Throughput is expressed as a number with a time unit attached to
it (e.g. per minute, per hour, per day, per month, etc.).
 Inventory (I) is the number of flow units in the system (e.g. customers in
a coffee shop, headcount of students at CSUN, cars in a dealership, etc.).
Inventory is a number with no time unit attached to it.
Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 5
K1 . The Coffee Shop
 On average, there are 5 customers in the store (system), 4 are waiting in
line (buffer) to order, and one is with the server.

b) What is the inventory (I) in the coffee shop?

On average, there are 5 customers in the coffee shop.
Inventory is 5.
I = 5 flow units.
R = 1 flow unit per minute
c) How long, on average, is a customer in your coffee shop?
 Flow Time is indeed inventory expressed in units of time.

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 6
K1 . The Coffee Shop
 Flow Time (T) is the time it takes an input to become an output. It is the
time a flow unit spends within a system.
 Before a customer steps into the system, there are 5 other customers in
the system.
 At the instant she steps into the line for service, one fully served customer
leaves the system. That is, there are always 5 people in the system.
 Our incoming customer at the beginning has 4 people in front of them,
then 3 in front and 1 behind, then 2 in front and 2 behind, then 1 in front
and 3 behind, then no one in front and 4 behind her.
 At the instance when she steps out of the system, just in the fraction of
second stepping out, she looks over her shoulder.
 How many people are behind her?
 5 people.
 At what rate did they come in?
Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 7
K1 . The Coffee Shop
 1 per minute.
 How long does it take 5 people to come in if they arrive at the rate of 1 per
minute?
 1 minute 1 customer
 How many minutes (T) 5 customers
 T = (1×5)/1
 T = 5 minutes.
 We could have also said:
 How many customers are in the system?
 5 customers.
 At what rate are they served?
 1 per minute.
 How long does it take to serve 5 people at the rate of 1 per minute?

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 8
K1 . The Coffee Shop
 On average, a customer spends 5 minutes in the coffee shop; flow time (T)
is 5 minutes.
 Each customer enters the coffee shop, spends 5 minutes on average and
then leaves.
 In the above computation, the flow time (T) is defined in minutes, because
R was in minutes.
 R carries a time unit with it, i.e., 1/minute., 1(60) = 60/hour, and, if a day is
8 hours, it can also be expressed as (60) (8) = 480/day.
 However, remember: inventory (I), does not carry a time unit, it is
always a number. Now, let us generalize:
1 time unit R flow units
How many time units (T) I flow units
T= I*1/R  T = I/R
RT= I.
Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management.
9
K1 . The Coffee Shop
 The Little’s Law is expressed as Throughput x Flow Time = Inventory.
 R×T = I or T = I/R or R = I/T
 A Fundamental Insight. Note, that the Little’s Law, T=I/R, is nothing
more than a unit conversion, converting numbers into time. It turned 5
units of inventory into 5 minutes of inventory.
 Suppose we have 100 units of item A, and 1,000 units of item B. What
item do we have more of?
 In the count dimension, item B has a higher inventory. Suppose we use 4
units of item A per day (RA= 4/day), and 200 units of item B per day
(RB=200/day). In the time dimension, we have (T=100/4), 25 days
inventory of item A, and (T=1,000/200) 5 days inventory of item B.
 On the time dimension, the inventory of item A is larger than the inventory
of item B. It takes more time to consume the inventory of item A,
compared to that of consuming item B.
Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 10
K1 . The Coffee Shop
 In addition to measuring inventory in count and time dimensions, we can
measure it on the third dimension of value. How much money is invested in
the inventory of each item? This is useful in financial planning, cost
analysis, and warehouse operations.
 There is even a fourth dimension. How much space (in a warehouse)? For
items taking a large portion of a warehouse, we may conduct a more
careful warehouse design. For a large number of items which may take a
small portion of warehouse, we may have a rough design.

Units

Value Inventor Spac

y e
Time

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 11
K1 . The Coffee Shop
 Now suppose there are two waiting lines. Suppose R is still 1 per minute
and still on average there are 5 customers in the first line to pay for their
order and get their non-exotic orders. In addition, suppose there are 4
customers in the exotic order (latte, cappuccino, etc.) waiting line. 40% of
the customers place exotic orders. What is the flow time of a person who
orders latte, cappuccino, etc.

40
1/min

%
 Such a customer spends 5 minutes in the first line. Throughput of the
second line is R= 0.4(1) = 0.4 customers per minute.
 Inventory of the second line is 4.
 RT=I  0.4T=4  T=10
 Simple order T =5, Exotic order T= 5+10 = 15

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 12
K1 . The Coffee Shop
 What is the flow time of a customer? S/he is neither a customer who puts in
a simple order nor one with exotic order, but s/he is both.
 Procedure 1- Not good.
 60% simple order: T = 5, 40% exotic order: T=5+10= 15
 A customer: T= 0.6(5) + 0.4(15) = 9 minutes
 Procedure 2- Not bad.
 Everyone goes through the first process and spends 5 minutes. 60% spend
no additional time, 40% spend 10 additional minutes. 0.6(0) + 0.4(10) = 4 
4+5 =9.
 Procedure 3- Good.
 Throughput of the system is 1 per minute. There are 9 people in the system
(5 at the register and 4 in the second line).
 RT= I  1T=9  T=9
 Throughput in this system was 1 per minute or 60 per hour or 720 per day
(assuming
Process 12Key
Flow Analysis, hours per
Problem day).
1, A. ButSystems
Asef-Vaziri, inventory in the
& Operations system is always 9.
Management. 13
K1b . The Coffee Shop
 You enter a Starbucks coffee shop. The door opens every 20 seconds. Once
for a customer to come in, once for a customer to leave. On average there
are 6 customers in the line. What is the throughput of this system.

Every 40 seconds, one customer enters and one customer leaves.

Customer Time (s)
1 40
x 1
X = (1×1)/40  1/40 per second

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 14
K1b. The Coffee Shop
R= 1/40 per second.
R= How many per minute?
R= (1/40)60 = 1.5 per minute.
R= How many per hour?
R= (1.5)60 = 90 per hour.
If there are 4 busy-hours of this type, In all these situations
there are always, on
R= How many per 4-busy-hour-day?
average, 6
R= 90(4) = 360 customers in the
If a month is twenty 4-hour-busy days, waiting line.
R= How many per month?
R = 20(360) = 7,200 per month
R = 1.5 per minute.
There are 6 customers in the line, how long does it take you to get your
coffee
Process and leave.
Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 15
K1b. The Coffee Shop
1.5/min 1.5/min
I=6
RT=I  1.5T=6  T= 4 minutes
 Now suppose there are two waiting lines. R is still 1.5 per minute, and still,
on average, there are 6 customers in the first line to pay for their order and
get their non-exotic orders. In addition, there are 3 customers in the exotic
order (latte, cappuccino, etc.) waiting line.
 1/3 = 33.33333333333333333333333333333333333333% of the
customers place exotic orders. What is the flow time of a person who orders
latte, cappuccino, etc.?

3
1/ 1.5/min
1.5/min 2/3

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 16
K1b. The Coffee Shop
 Such a customer spends 4 minutes in the first line.
 I= 6, R=1.5/min  T=6/1.5= 4 ?
 4 minutes since R is in minutes.
 Throughput of the second line is R= (1/3)(1.5) = 0.5 customers per minute.
Inventory of the second line is 3.
 RT=I  0.5T=3  T=6
 Simple order T =4. Exotic order T= 4+6 = 10
 What is the flow time of a customer? S/he is neither a customer who puts a
simple order nor one with exotic order, but s/he is both.
 Procedure 1- Not good.
 2/3 simple order: T = 4
 1/3 exotic order: T=10
 A customer: T= (2/3)4 + (1/3)10 = 6 minutes
Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 17
K1b. The Coffee Shop
 Procedure 2- Not bad.
 Everyone goes through the first process and spends 4 minutes. 2/3 spend
no additional time, 1/3 spend 6 additional minutes. 0(2/3) + 6(1/3) = 2
 4+2 = 6
 Procedure 3- Good.
 Throughput of the system is 1.5 per minute. There are 9 people in the
system (6 at the register and 3 in the second line).
 RT= I  1.5T=9  T=6

Process Flow Analysis, Key Problem 1, A. Asef-Vaziri, Systems & Operations Management. 18