Chapter 2

Introduction
to Processes
Operations Management, 3rd Edition
Gérard Cachon and Christian Terwiesch
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 Learning Objectives
L O 2-1. Identify an appropriate flow unit for a
process.
L O 2-2. Distinguish among the three key process
metrics (flow rate, flow time, and inventory) and
evaluate average flow rate and flow time from
departure and arrival data.
L O 2-3. Use Little’s Law to evaluate the three key
process metrics.
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 Introduction
You cannot manage what you cannot
measure.
If you do not know how to measure a
process, then it is difficult to know how to
improve a process.

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 Process Definition, Scope,
and Flow Units
LO 2-1
What should the manager measure to determine
if the process is performing well?
• Process: A set of activities that take a collection
of inputs, perform some work or activities with
those inputs, and then yield a set of outputs

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 Process Definition, Scope, and Flow
Units 1

Managers face the same questions everyday.

Is the process performing well?
How can we make the process better?
• The first step is to decide how to measure the
performance of the employees.
• Develop a plan for making employees better at
what they do.

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 Process Definition, Scope, and Flow
Units 2

Process: A set of activities that take a collection of

inputs, perform some work or activities with those
inputs, and then yield a set of outputs
Process flow diagram: A graphical way to describe
the process. It uses boxes to depict resources,
arrows to depict flows, and triangles to depict
inventory locations.
Resources: Workers or machines that transform
inputs into outputs
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Figure 2.1:

Process Flow Diagram

A simple process flow diagram of the radiology unit at
Presbyterian Hospital

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 Process Definition, Scope, and Flow
Units 3

Process Scope: The set of activities and processes

included in the process

Flow Unit: The unit of analysis that is considered in a

process analysis

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 Check Your Understanding (1)
Question
Which of the following is an appropriate flow unit
for a roller coaster at an amusement park?
A. Seats on the roller coaster
B. Riders
C. Employees
D. Miles per hour (i.e., speed of the roller coaster)
E. Operating hours per day

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 Check Your Understanding (1)
Answer
The correct answer is?
B
Explain…

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 Rules to Define Flow Unit
1. Choose a flow unit that corresponds to what you
want to track and to measure in the process.
2. Stick with the flow unit you define.
3. Choose a flow unit that can be used to measure
and describe all activities within the process.

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 Three Key Process Metrics
LO 2-2
Process Metric: A scale or measure that informs us about
the performance and capability of a process
1. Inventory: The number of flow units within a process
(measured in number of flow units, for example, 30
patients)
2. Flow Rate: The rate at which flow units move through
the process (measured in number of flow units per
unit of time, for example, 25 patients per day)
3. Flow time: The time a flow unit spends in a process
from start to finish (measured in time units, for 2-12

example, 35 minutes)
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 Three Key Process Metrics
Inventory tells us how much “stuff” (flow units) is in the
process. Inventory requires space and can cost money (for
example, more patients may necessitate a larger waiting
room, more products may necessitate a larger store).
Flow rate tells us the rate at which “stuff” (flow units)
travel through the process. More units flowing through a
process (high flow rate) is generally desirable because the
goal of the process is to produce output.
Flow time tells us how much time a flow unit spends in the
process. In manufacturing, low flow times are generally
desirable since that means flow units move through the 2-13

process more quickly from start to finish.

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 Check Your Understanding (2)
Question:
Over the course of an 8-hour day, a dentist’s office
treats 24 patients. What is the hourly flow rate of
patients in this dentist’s office?
Answer:

24 patients
Flow rate = = 3 patients per hour
8 hours
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 Little’s Law
Linking Process Metrics Together
LO 2-3 1

Little’s Law: The law describing the relationship

between the three key process metrics:
Inventory = Flow rate * Flow time
I=R*T
where I = Inventory,
R = Flow rate,
T = Flow time 2-15

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 Little’s Law
Linking Process Metrics Together
LO 2-3 2

If you know (or observe) any of the two key process

metrics, you can use Little’s Law to derive the third.
Inventory = Rate * Time
I=R*T
Therefore, R = I / T and T = I / R
Little’s Law refers to averages for the three key process
metrics; for example, the average inventory level, the
average flow rate, or the average flow time. The values
for individual flow units can vary. 2-16

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 Check Your Understanding (3)
Question
During a typical Friday, the West End Donut Shop
serves 2,400 customers during the 10 hours it is open.
A customer spends (on average) 5 minutes in the shop.
On average, how many customers (on average) are in
the shop simultaneously?

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 Check Your Understanding (3)
Answer
2,400 customers / 10 hours = 240 customers per hour
(240 customers / hour) / 60 = 4 customers per minute
Therefore, Flow rate = R = 4 customers per minute
Flow time = T = 5 minutes (given)
Therefore, I = R * T = 4 customers per minute * 5 minutes
= 20 customers

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 Review
Ten customers visit Candy Haven Bakery from 8 am
to 10 am. The customers spend 10, 15, 20, 11, 8, 12,
5, 18, 29, and 32 minutes in the bakery.
What is the average flow rate of customers in the
bakery (in customers per hour)? What is the average
number of customers in the bakery at the same
time?

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 Review
Answer
R = 10 customers/2 hours = 5 customers/hour
T = average of times each customer spent in bakery
= (10 + 15 + 20 + 11 + 8 + 12 + 5 + 18 + 29 + 32) / 10
= 160 / 10 = 16 minutes = 0.2667 hours
I = R * T = 5 customers/hour * 0.2667 hours = 1.33
customers are in the bakery at the same time, on
average

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 End of Chapter 2

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