Question: The square root law is based on empirical observations from process improvement efforts that result in lead time reductions. It states that work in process

The square root law is based on empirical observations from process improvement efforts that result in lead time reductions. It states that work in process inventory (WIP) reduces in the proportion of the square root of the lead time. Thus if a firm reduces lead time from 10 days to 8 days, WIP inventory would reduce from 100 to 100*(8/10)0.5=89.44 or 89 units. Littles Law would suggest that, if the output rate is the same (Output rate = WIP/throughput time = 100/10= 10 units per day), then an 8 day lead time would require (WIP= throughput time *output rate = 8 * 10/day = 80 units). What do you think accounts for the differences between the two results (89 and 80 units)? Why are real life reductions in WIP (11 compared to 20 unit reduction as in the above two cases) lower than what would be predicted by Littles law?

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