The first volume of the PPI Journal included a tutorial article on Little’s Law, explaining the fundamental relationship between throughput, cycle time and work-in-process (WIP) for all production systems, including those that are contained within capital projects. For those new to Operations Sciences, a more naïve interpretation of Little’s Law leads novices to infer that one need only increase WIP arbitrarily high to increase throughput to whatever target level is desired. While Little’s Law is generally true under very broad assumptions, it cannot always be treated as if any pair of variables selected from throughput, WIP and cycle time can be independently altered to set the third variable to a desired target. Real production systems always have other physical constraints that place upper limits on throughput and lower limits on cycle time.
Through some simple examples, we explain how physical constraints manifest themselves in limiting the range of feasible values that throughput, cycle time and WIP can achieve. The discussion leads to the important concept of Critical WIP, which is the minimum WIP level necessary to achieve the maximum throughput in a production system where there is no variability. We then provide a qualitative discussion about how variability affects system performance and affects the optimum level of WIP necessary to achieve desirable throughput and cycle time performance. Finally, we conclude with a discussion of how adding capacity at non-bottlenecks can improve performance when there is significant variability.
Keywords: Little’s Law; Optimal Level of WIP; Critical WIP
Please log in or join to access the full article.