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Little's Law

Little’s Law is a basic mathematics equation for calculating lead time. In the layman’s version, it says:

Lead time = Number of units in WIP / Average Production Rate

Let’s say you had 34 items in work-in-process, and you produce 10 per day. That means that it will take any new item 3.4 working days to make its way through your system.

The implication of this equation is obvious. The more work you have in process, the longer it takes product to make it through your system. Now, this might not necessarily mean that the customer will have to wait—you may build to vast warehouses, ready to ship at a moment’s notice.

That situation is still a problem, though. You still have a long lead time. It is just long from a different perspective. It means that you are locked in for days, or possibly weeks. That means that you can’t adjust to shifts in customer demand, and you have to wait longer to see product modifications work their way through your system.

Little’s Law is extremely important in make-to-order processes. The customer is waiting the whole time as …

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