ISOM 2700: Operations Management
Session 2. Process Analysis
Yiwen Shen
Dept. of ISOM, HKUST
Spring, 2025
1
Agenda
• Process View of Organization
• Process Measures
• Process Analysis
2
Operating Room in a Hospital
• The patients need to go through a set of activities
– Registration and consultation
– Preparation of procedure
– Actual procedure
– Recovery and discharge
• Suppose you are the unit manager, how would you
measure its performance?
3
The Patient’s View
• For a specific patient, a Gantt Chart can be used
Registration and
consultation
Preparation
for operation patient wait
Actual operation
In OR
Recovery an
d discharge
8:00 9:00 10:00 11:00 12:00 13:00
Activity in Operating Room
• Information: sequence, duration, dependence 4
The Manager’s View
• Suppose you are now the OR manager that wants to evaluate
its performance and make improvement
• Can you do this with one Gantt chart for each patient? (There
are perhaps hundreds of patients going to the OR each month)
• No! This would be too messy and complicated for meaningful
analysis ---- and it is usually unnecessary!
5
The Manager’s View
• Instead, you can view the OR and its procedures as a process
for each patient to pass through
• Benefits: allow you to build a holistic/macro view of the
system without diving into the details of each patients
– Recall modelling and abstraction are needed in OM!
• Then, you can identify the key challenge and improvement
opportunities for system performance
• Limitation: you will lose the granular information of each
patient (this is usually fine for analysis purpose) 6
Process View
• A business process is a network of activities
performed by resources that transform inputs into
outputs.
Process
Activity 1 Activity 2
Input Output
Flow units: Buffer 1 Buffer 2 Goods
(material, Services
customers)
Resources: labor, material, capital
7
Examples of Processes
wood
Factory guitars
metal
students University alumni
bulk items Distribution small parcels
center
patients Hospital recovered patients
• Processes can involve both goods and services.
• Processes can have multiple inputs and/or multiple outputs.
8
Defining a Process’s Flow Unit
• The flow unit is what is tracked through the process and
generally defines the process output of interest.
Processes Flow unit
students University alumni A person
Processing
milk milk powder Lbs of milk powder
plant
Blood
people donation blood Pints of type AB blood
center
9
Process Flow Chart
• Process flow chart is the use of a diagram to present
the major elements of a process
• Activities or operations
• Resources
• Product flows
• Decision points Storage
Buffer
Input Activity 1 Activity 2 Output
Resources Resources
10
Process Flow Chart: Terminology
Tasks/activities
Buffer (Storage or
areas or queues)
Flow of
goods/materials
Decision Buy?
11
Process Flow: Considerations
• Boundaries of the process:
Operating Surgery
room department Hospital
Healthcare service
• Level of simplification:
– Information granularity versus analytical convenience
• Both should depend on the goal/target of study
– Problem-driven and goal-oriented 12
Agenda
• Process View of Organization
• Process Measures
• Process Analysis
13
T-shirt Production: Problem Description
Fabric Cutting Sewing Packing T-shirt
Resources: Worker A Worker B Worker C
Processing time: 3 min/unit 4 min/unit 3 min/unit
• How long does it take to produce a unit?
– How do you define “how long”?
• How many units can the process produce in an hour?
• What is the time between two successive production
completions?
• How many T-shirts are in the system at a given time on average?
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Performance Measures
• Flow time: the time spent by a given unit of product in the
system
– For a given unit, how long does it take for it to travel through the system?
• Cycle time: the time between two successive product
completions
– What is the time gap between two successive units being produced?
• Flow/through rate: the rate at which the process is delivering
output
– How many units does the system actually produce per hour?
15
Performance Measures
• Capacity: the maximum rate at which output can be delivered
given sufficient inputs and demands
– How many units can the system produce at most per hour?
– Capacity is the maximum flow rate of the process
• Work-in-process inventory: the number of units staying within
the process at a given time
– How many units of products are in the system right now?
– Why this matter? Think about the congestion in LG1 around lunch time!
16
T-shirt Production: Gantt Chart
Time (in minutes)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Worker A
Worker B
Worker C
• Each colour represents a unit of product
• We start from the time that the red unit enters the system; assume
we have enough inputs and demands for the system
• After worker A finishes cutting, she waits an additional minute,
why?
• After worker C finishes packing, she waits an additional minute,
why?
• Worker B is always busy, why?
17
T-shirt Production: Gantt Chart
Time (in minutes)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Worker A
Worker B
Worker C
• It takes 10 minutes to produce 1 unit, i.e., flow time = 10 minutes
• The process can produce 60/4=15 units per hour, i.e., flow rate =
capacity = 15 units per hour
• The time between two successive production completions is
equal to 4 minutes, i.e., cycle time = 4 minutes
• The average work-in-process inventory is 3/4+1+3/4=2.5 units
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T-shirt Production: Gantt Chart
Time (in minutes)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Worker A
inventory
Worker B
Worker C
Flow time Cycle time
• Be sure to differentiate between flow time and cycle time
• By definition, we always have
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Agenda
• Process View of Organization
• Process Measures
• Process Analysis
– Little’s Law
20
Little’s Law: Visualization
• Let us move back to the operating room
• As manager, you can draw a cumulative inflow/outflow chart
Cumulative
inflow
Flow
rate
Cumulative
Flow time outflow
Inventory
• Quantities shown on the chart: Flow time (x-gap), inventory (y
gap), flow rate (overall slope)
– How should they be connected? 21
Little’s Law: Explanation
For a given time point
Cumulative
inflow
Flow
rate
For a given patient
Cumulative
Flow time outflow
Inventory
• On average: y-gap ≈ x-gap × slope
• Little’s Law: Avg. Inventory = Avg. Flow rate × Avg. Flow time
• With common notations: I = R × T
– I: avg inventory, R: avg flow rate, T: avg flow time
22
Little’s Law: Sub-processes
Fabric Cutting Sewing Packing T-shirt
Resources: Worker A Worker B Worker C
Processing time: 3 min/unit 4 min/unit 3 min/unit
• Little’s law can be applied to both the full process as well as any
subprocesses
– E.g., the cutting, sewing, and packing stages in the T-shirt problem
• For subprocesses, we need to use the corresponding flow time
(shorter) and inventory (fewer)
23
Little’s Law: Implications
• Little’s Law holds for all types of stable process, regardless of
– the complexity of the process (multiple flow units/resources)
– the sequence for the flow unites to be served (FIFO vs LIFO)
– randomness in the arrival and service time
• Stable process: inflow = outflow, inventory does not
accumulate to infinity as time goes by
• Implications:
– finding the third measure when the other two are known
– trade-off when setting management goals 24
Little’s Law: Calculations
– To determine the how many units are in system
– To determine how much time a unit spends in the system
– To determine how many units flow through the system in a
given time
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Example 1: T-shirt Production
Time (in minutes)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Worker A
inventory
Worker B
Worker C
Flow time Cycle time
• For the process, flow rate R = 15 units per hour, flow time
T = 10 minutes = 1/6 hours
• By Little’s law: average inventory = R×T = 2.5 units
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Example 2: Job Flow Problem
• A branch office of an insurance company processes 10,000
claims per year and the office works only 50 weeks per year
• Q1: What is the flow rate?
– R = 10000/50 = 200 claims per week
• Q2: If the average processing time is three weeks for each claim, then
how many claims are in different stages of the process at a given time?
– Flow time: T = 3 weeks
– Average inventory: I = 200 × 3 = 600 claims
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Example 2: Job Flow Problem
• A branch office of an insurance company processes 10,000
claims per year and the office works only 50 weeks per year
• Q3: Assume an improvement is made such that new processing time
can be reduced by 80% (i.e., from 3 weeks to 0.6 week), then how
many claims are in different stages of the process at a given time?
– Now: R = 200 claims per week and T = 0.6 weeks
– New inventory: I = 200 × 0.6 = 120 claims
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Customers in IKEA
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Customers in IKEA
• The amount of time customers spend in a
supermarket is of interest to the management.
• How would you go about finding the average time
that customers spend in the store?
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