Which theory describes the relationship between WIP, throughput, and lead time?

Which theory describes the relationship between WIP, throughput, and lead time?

• A. Hypothesis Testing
• B. Little's Law
• C. Deming Theory
• D. Taylor's Law of inventory Management

Answer: (B)

Little's Law captures how flow metrics relate in a stable system. It says that the average number of items in the system (work in progress) is the product of the rate at which work is completed (throughput) and the average time an item spends in the system (lead time). In formula form: WIP = throughput × lead time. Think of it this way: if you finish 8 items per hour (throughput) and each item spends about 0.75 hours in the process (lead time), you’ll have on average 6 items in progress at any moment (WIP). If you want to lower lead time without changing throughput, you reduce WIP, and lead time tends to drop accordingly; conversely, increasing throughput or lead time changes WIP in the same proportional way. This relationship holds under steady-state, long-run averages for a stable process, and it applies broadly across manufacturing and flow systems. Other options describe different notions (statistics testing, quality management philosophies, or unrelated inventory ideas) and don’t provide this direct quantitative link between WIP, throughput, and lead time.

Little's Law captures how flow metrics relate in a stable system. It says that the average number of items in the system (work in progress) is the product of the rate at which work is completed (throughput) and the average time an item spends in the system (lead time). In formula form: WIP = throughput × lead time.

Think of it this way: if you finish 8 items per hour (throughput) and each item spends about 0.75 hours in the process (lead time), you’ll have on average 6 items in progress at any moment (WIP). If you want to lower lead time without changing throughput, you reduce WIP, and lead time tends to drop accordingly; conversely, increasing throughput or lead time changes WIP in the same proportional way.

This relationship holds under steady-state, long-run averages for a stable process, and it applies broadly across manufacturing and flow systems. Other options describe different notions (statistics testing, quality management philosophies, or unrelated inventory ideas) and don’t provide this direct quantitative link between WIP, throughput, and lead time.