Sales and Inventory System
Chapter 3: Process flow measures
3.1 Objective
The objective of this chapter is to identify key operational measures that may be used to study process flows. They are linked together using Little's law. We then present a series of examples that show how process flow analysis may be used to study performance. The objective is to study current performance as well as identify target areas for improvement. We also link the operational measures of performance to financial measures.
In a class of 100 minutes we start by discussing the importance of building a time based capability in today's competitive environment. We then establish Little's law to set up other operational measures - namely inventory and throughput that impact flow time. Several examples from the chapter are discussed to make this relationship clear. We then link these operational measures to financial measures to identify what form improvements may take. We then discuss the Kellogg CRU Rental case to demonstrate how such an analysis may be used to identify key areas for improvement.
3.2 Additional Suggested Readings
We assign a short case as supplemental reading for the analysis of process flows. The case is used to do a thorough analysis of flows and identify key drivers of cost and revenue in a process. This understanding is then used to identify actions that improve performance. * “CRU Computer Rentals”. Kellogg Case. Author: Sunil Chopra. Available from: http://www.kellogg.northwestern.edu/cases/index.htm. Suggested assignment questions are contained in the case.
3.3 Solutions to the Chapter Questions
Discussion Question 3.1
The opposite of looking at average is looking at a specific flow unit’s flow time, and the inventory status and instantaneous flow rate at a specific point in time. Because flow times change from flow unit to flow unit, it is better to look at the average over all flow units during a period of time. Similar for inventory and throughput.
3.1 Objective
The objective of this chapter is to identify key operational measures that may be used to study process flows. They are linked together using Little's law. We then present a series of examples that show how process flow analysis may be used to study performance. The objective is to study current performance as well as identify target areas for improvement. We also link the operational measures of performance to financial measures.
In a class of 100 minutes we start by discussing the importance of building a time based capability in today's competitive environment. We then establish Little's law to set up other operational measures - namely inventory and throughput that impact flow time. Several examples from the chapter are discussed to make this relationship clear. We then link these operational measures to financial measures to identify what form improvements may take. We then discuss the Kellogg CRU Rental case to demonstrate how such an analysis may be used to identify key areas for improvement.
3.2 Additional Suggested Readings
We assign a short case as supplemental reading for the analysis of process flows. The case is used to do a thorough analysis of flows and identify key drivers of cost and revenue in a process. This understanding is then used to identify actions that improve performance. * “CRU Computer Rentals”. Kellogg Case. Author: Sunil Chopra. Available from: http://www.kellogg.northwestern.edu/cases/index.htm. Suggested assignment questions are contained in the case.
3.3 Solutions to the Chapter Questions
Discussion Question 3.1
The opposite of looking at average is looking at a specific flow unit’s flow time, and the inventory status and instantaneous flow rate at a specific point in time. Because flow times change from flow unit to flow unit, it is better to look at the average over all flow units during a period of time. Similar for inventory and throughput.