The Lecture Notes Blog

Home » Posts tagged 'Flow Time'

Tag Archives: Flow Time

Calculating the flow time efficiency


Instead of simply trying to optimize processes in order to cut down on waiting time, it is also important to look at the customer experience as a whole. How does, for example, a patient experience an appointment at a physician? The customer experience in this specific case does not start in the waiting room at the clinic, but also includes driving, parking, checking-in, filling out forms, driving back home etc. We thus have – so far – looked only at a small part of this entire customer experience. Many activities along this line of activities are not adding any value for the customer – for example, getting to the doctors office is important, but does not cure any sickness.

The question of exactly how much time spent in a process (from the customer’s perspective) adds any actual value for the customer can be answered by calculating the flow time efficiency:

flow time efficiency = total value add time of a unit / total time a unit is in the process

This analysis is the basic idea behind the so-called value stream mapping. Here, every process is split-up between onstage actions (which are visible to the customer), backstage actions (which are invisible to the customer) and customer actions (which are those actions that the customer performs by himself) as well as additional support processes. Possible ideas for optimising the waiting time are moving work off stage (e.g. doing a rental car check-in via the internet), reducing customer actions (e.g. not retake basic medical information at each hospital visit), removing steps that offer no value (if possible) or avoiding too much fragmentation due to specialization.

These lecture notes were taken during 2013 installment of the MOOC “An Introduction to Operations Management” taught by Prof. Dr. Christian Terwiesch of the Wharton Business School of the University of Pennsylvania at Coursera.org.

Little’s law


Little’s law was named after the American professor John Little (1950s). It defines the relationship between the inventory, the flow rate and the flow time, who have all been already defined previously.

inventory = number of flow units in the process
flow rate = rate at which flow units are being processed
flow time = time a single flow unit spends in the process

Little’s law: inventory (I) = flow Rate (R) * flow Time (T)

Little’s law is important, because it can help us calculate one of the three variables. Once two of the variables are known, the third one is set by the law. This also means that, form the standpoint of an executive, two variables can be picked by management while the third one then falls into place.

These lecture notes were taken during 2013 installment of the MOOC “An Introduction to Operations Management” taught by Prof. Dr. Christian Terwiesch of the Wharton Business School of the University of Pennsylvania at Coursera.org.

Flow rate / throughput, flow unit, inventory and flow time


The three most important performance measures of a business process are flow rate / throughput, inventory and flow time. In the following definitions, the term “flow unit” will be used a lot. A flow unit is the basic unit of analysis in any given scenario (customer, sandwich, phone call etc.).

Flow rate / throughput: The number of flow units (e.g. customers, money, produced goods/services) going through the business process per unit time, e.g served customers per hour or produced parts per minute. The flow rate usually is an average rate.

Flow time: The amount of time a flow unit spends in a business process from beginning to end, also known as the total processing time. If there is more than one path through the process, the flow time is equivalent to the length of the longest path.

Inventory: The number of flow units that are currently handled by a business process, e.g. the number of customers in a store, the number of enrolled students in an university etc. pp.

It should be kept in mind that the definition of inventory in Operations Management is different from the definition used in accounting. While the number of bottles on stock qualifies as inventory in both Operations Management and accounting, the number of patients waiting at a dentists office would not be seen as inventory in accounting – but is, in fact, inventory in Operations Management.

These lecture notes were taken during 2013 installment of the MOOC “An Introduction to Operations Management” taught by Prof. Dr. Christian Terwiesch of the Wharton Business School of the University of Pennsylvania at Coursera.org.
%d bloggers like this: