The Corrupting Influence of Variability - Performance and Variability
3 important questions on The Corrupting Influence of Variability - Performance and Variability
Why do the performance measures use ''ideal'' values instead of ''real'' values?
Because a possible difference in these values already indicate room for improvement. Hence, using ideal values in calculating performance measures sets an even greater benchmark.
1: What is ?
2: So what is ?
3: Which is larger, or
?
4: Which provides the smallest value, one calculated with
or one calculated with
?
5: What does the answer to question 4 imply?
1:
2: (Think about what
represents.)
3: is larger.
4: An Ec with To is larger than an Ec with
5: It implies that the capacity effectiveness of the real, non-ideal situation is better than that of the ideal situation.
This might seem paradoxical, but is logical: in the ideal situation, process times will be shorter and so will utilization be. Hence, there will be more capacity wasted and Ec will this be larger using 'ideal' values.
1: What values can take on? Can it be negative?
2: Is a smaller better or is a large one better? Does it have an ideal value?
1: 0 to infinity (though the latter is not realistic).
It cannot be negative since costs, demands and process times are always expressed in positive values. Furthermore is the average on hand inventory level, and on-hand inventory cannot go below 0.
2: A smaller is better since this assumes inventory levels and holding costs are relatively small in comparison with that of inventory that 'will be sold'. Thus, the ideal value will be 0.
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