Submitted by: Submitted by fedorem
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Category: Business and Industry
Date Submitted: 04/15/2016 02:41 PM
Practice Problems for Little’s Law
Q2.2 (Airline) Consider the baggage check‐in of a small airline. Check‐in data indicates that from 9am to
10am, 255 passengers checked in. Moreover, based on counting the number of passengers waiting time
in line, airport management found that the average number of passengers waiting for check‐in was 35.
How long did the average passenger have to wait in line?
Q2.3 (Inventory Cost) A manufacturing company producing medical devices reported $60,000,000 in
sales over the last year. At the end of the same year, the company had $20,000,000 worth of inventory
of ready‐to‐ship devices.
a. Assuming that units in inventory are valued (based on COGS) at $1,000 per unit and are sold for
$2,000 per unit, how fast does the company turn its inventory? The company uses a 25% per
year cost of inventory. That is, for the hypothetical case that one unit of $1,000 would sit exactly
one year in inventory, the company changes its operations division a $250 inventory cost.
b. What – in absolute term – is the per unit inventory cost for a product that costs $1,000?
Q2.6. (Highway) While driving home for the holidays, you can’t seem to get Little’s law out of your mind.
You note that your average speed of travel is about 60 miles per hour. Moreover, the traffic report from
the WXPN traffic chopper states that there is an average of 24 cars going in your direction on a one‐
quarter mile part of the highway. What is the flow rate of the highway (going in your direction) in cars
per hour?
Q2.7. (Industrial Baking Process) Strohrmann, a large‐scale bakery in Pennsylvania, is laying out a new
production process for their packaged bread, which they sell to several grocery chains. It takes 12
minutes to bake the bread. How large an oven is required so that the company is about to produce
4,000 units of bread per hour (measured in the number of units that can be baked simultaneously)?