The Logistic Operating Curve: Everything you need to know about capacity, throughput time and work-in-progress levels

In the field of manufacturing, logistic operating curves represent robust and well-proven models which aim to resolve the dilemma of production scheduling. These curves describe how a production system behaves, under otherwise unchanged boundary conditions, when a different level of work-in-progress (WIP) is set. They thus characterise the logistical behaviour in terms of throughput, throughput-time and on-time delivery of a production process when WIP levels change.

The logistic operating curves show that it is not possible to define a simultaneous optimum for all the aforementioned performance metrics. For example, ensuring high production system utilisation requires high WIP levels, which in turn lead to prolonged throughput-times. However, prolonged – and therefore highly variable – throughput-times stand in the way of high on-time delivery rates.

It is therefore necessary to strive for a logistical positioning that balances the conflicting production logistics objectives, starting from a strategically determined primary objective and analysing the effects on the other objectives.

Throughput diagrams and logistic operating curves are interrelated in the analysis of production processes. Whilst throughput diagrams visualise the temporal progression and logistical targets of a system, logistic operating curves summarise several operating steady-states and highlight functional relationships between WIP levels, throughput-times and production system utilisation. These characteristic curves illustrate how a production system behaves when parameters such as WIP levels change, whilst the remaining boundary conditions remain constant. A current state in production corresponds to a point on the characteristic curve, which describes the behaviour of the system under the given conditions.

The basic form of logistic operating curve is universal, but is influenced by specific factors such as available capacity and the volume of orders to be processed. In particular, the mean throughput time – that is, the average duration required to process an order – and its deviation play an important role. Furthermore, the exact shape of the logistic operating curve depends on how the production system is integrated into the overall material flow. If a system is closely linked to other processes, delays or bottlenecks in upstream or downstream processes can affect the characteristics, for example by influencing WIP levels.

Below a certain WIP level, in what is known as the under-load range, there is an insufficient supply of work, leading to a drop in output and shorter throughput times. As soon as WIP exceeds this critical level, the transition range begins, during which output remains stable as there is a continuous supply of work. In the overload zone, on the other hand, the throughput time increases in proportion to the WIP level, although throughput barely increases. This prevents WIP-related interruptions to the material flow, but at the cost of longer throughput times.