Cycle Time (CT)

Cycle Time is the length of time, on average, that it takes to complete a step or set of
steps within an operation. In our laundry example, the cycle time for the washer is thirty
minutes and the cycle time for the dryer might be anywhere from forty-five minutes to an
hour. Note, however, that cycle time refers to the average time.

In a large laundry operation with ten washers, the cycle time for a single load would be
three minutes (thirty minutes divided by ten washers).

It is also important to be careful what units we are talking about. If the dryer is large
enough to run two loads of laundry (and our operation is set up in such a way that it does)
the cycle time per washer-load will be half of the cycle time per dryer-load. Later on we
will also talk about the cycle time for the entire laundry process.

Dependent steps. Many operations have dependent steps, i.e. steps that can only be done
when a previous step has been completed. You could put your laundry into the dryer
before the washing machine, or you could fold it before putting it into the dryer, but
neither is likely to be productive. The interaction of dependent steps creates much of the
need for operations management.

Bottleneck
Within a set of dependent steps, there is generally one step that defines the speed at
which the entire operation can run. This step is called the bottleneck because, just like
liquid coming out of a bottle, it limits the speed of the entire operation. Let us assume
that the washer and dryer can each handle one "load" of laundry and that the cycle times
for each step are as follows:

Now imagine that we have a lot of laundry to do, such that as soon as we have put our
first load into the dryer we plan to start our second load in the washer, and so on. Once
our 'line' is full, which operation will decide (i.e., limit) the speed at which we can do our
laundry? The dryer will, because it will still be drying the first load when the washer
finishes its cycle on the second load. Generally, the step with the longest cycle time will
be the bottleneck.

The bottleneck is often an important area of focus for improving the capacity of an
operation, since if the bottleneck's capacity can be increased it will often increase overall
capacity, while increasing the output of a non-bottleneck step may have no effect. In our
laundry example, if we can dry one load of laundry per day by hanging it outside that will
let us do an extra load of laundry per day. If, however, we could wash a load by hand that
won't let us get any more laundry done since our washer is already capable of more
laundry than our dryer can handle.
Idle Time
Sometimes you only need to do one load of laundry, but because the steps in the process
are dependent, two machines (including you the folder) will be idle part of the time.

Since many operations are capable of completing their tasks faster than the bottleneck
operation, it will often not make sense to run them at full capacity. If you ran the washer
and dryer non-stop all day, you would accumulate extra loads of wet laundry waiting to
be dried. Eventually you would have to stop running the washer in order to let the dryer
catch up. Whether the washer is not running for a short period for each load (while we
wait for the dryer to finish), or has a longer period of downtime later in the day, that
downtime is called idle time.
Work in Process (WIP)
Work-in-process, or WIP, refers to inputs that are still in the operation. Laundry still in
the washer, the dryer or being folded would count as WIP in our example (as would
laundry in transit to either the washer or the dryer). WIP is sometimes discussed in dollar
terms, but will generally be considered in whatever units (such as loads of laundry) are
moving through the operation. In our example, once the 'line' is full, we would always
have a load either in the washer or waiting to be put into the dryer and another load in the
dryer. We would also have a load that is being folded, but since that load doesn't have to
wait for anything, that step will be empty some of the time. Ignoring the possibility that
folding is delayed by our loading and unloading the machines, we would expect to have a
load of laundry in-process at the folding step for thirty minutes (folding time) out of
every forty-five (cycle time of the laundry operation). We would therefore say that there
is two thirds of a load in that step in describing the WIP of the operation, or 2 2/3 loads of
WIP in total.

Buffer
Sometimes an operation will have storage space where WIP from one step can
accumulate before being worked on by the next step. There can be a large number of
reasons for having a buffer. Suppose we don't want the washer to run in the afternoon.
We might want to run it non-stop in the morning to get as many loads finished as
possible, but we would need space to put them in while they waited for the dryer to catch
up. In larger operations, a buffer may be important in order to make sure that the
bottleneck is never starved for inputs. Since the bottleneck sets the pace, loss of
production there may imply lost production for the entire operation.

Manufacturing Lead Time (MLT)

Manufacturing lead-time, or MLT, is the average length of time it will take a new set of
inputs to move all the way through the operation, assuming no unusual measures are
taken. A load of laundry, for example, would spend one cycle (45 minutes) in the washer,
including idle time, another cycle in the dryer (90 minutes total), and then two-thirds of a
cycle being folded (120 minutes). From laundry bag to clean and folded will take an
average of two hours. Note that because folding took place after our bottleneck (drying),
the load didn't have to stay there for a full cycle.

The laundry example is fairly simple, but in a more complex operation it might be
difficult to estimate MLT at a glance. There is a simple formula, known as Little's Law,
which can help. Little's Law states that:
Manufacturing Lead Time = Cycle Time * Work-in-Process
This simple rule makes sense if you imagine the path a new set of inputs (like a load of
laundry) must follow in order to pass through the operation. As each unit of WIP moves
forward, the new set of inputs takes its place. Each move occurs once per cycle, so
multiplying cycle time times WIP will give us our total lead-time.
In our laundry example, we had 2 2/3 loads of WIP. Multiplying 2 2/3 times our cycle
time of 45 minutes gives us 120 minutes.
Mapping an Operation
One of the ways a manager can use to understand and improve an operation is by
mapping it. By convention, we map processes (such as the washing machine) with
rectangles, places where WIP or raw materials reside with triangles, and indicate flows
with lines, using arrows to indicate direction. Capacity of each process can be added, if
desired.

A starting map for our laundry room would be as follows:

Information flows are also important in understanding how an operation works. Here, the
information flow is very simple; the washer and dryer each probably have a buzzer that
goes off when they are done, or perhaps we are simply close enough that we can hear
them stop running. In a more complex operation, however, information flows would not
be so straightforward. Information flows are generally recorded with a dotted line, so that
they are easily distinguished from physical flows.

Using Operations Management Tools

Let's assume for a moment that we're not doing our own laundry. Instead, we're living at
our parent's house and doing laundry for our neighbors on the weekends to make some
extra money. We charge $15 per load, including folding. We currently do six loads per
day before meeting up with our friends, who get up somewhat later than we do. Suppose
we are considering buying a better washer or a better dryer to help us make more money.
Our parents are willing to help out, since it will be their new washer or dryer, but it will
still cost us $100 for either upgrade. The new washer will take just 20 minutes to do a
load of laundry, while the new dryer will take just 30 minutes. Which, if either, should
we do?
Well, our understanding of bottlenecks makes it clear that buying the washer is unlikely
to make sense. The pace at which we can wash, dry and fold laundry is set by the slowest
step, drying. So let us consider the new dryer. What would our map look like?

Now each process has a cycle time of 30 minutes, suggesting a cycle time of 30 minutes
for the entire line as well. In practice our cycle time will almost certainly be longer, since
we were probably using our idle time in the folding process for moving laundry in and
out of the machines, resting or whatever. But as an approximation, we can estimate our
new capacity as being about 50% higher than it was before, or nine loads per day. Thus,
we would expect to earn an extra $45 per day, and would be able nearly to pay for the
dryer upgrade in a single weekend. We might want to check some assumptions, like our
ability to attract three extra loads of new business per day, but from the operations point
of view the new dryer looks like a good bet.