A warehouse is a flow system that moves goods from receiving to storage, picking, packing, and shipping. Throughput measures how much work the system completes in a given time, such as orders per hour or pallets per day. Cycle time measures how long one item or order spends moving through the process from start to finish.
These two ideas matter because they connect layout, staffing, equipment, and customer delivery speed.
Key Facts
- Throughput = completed units / time
- Cycle time = finish time - start time for one order or item
- Little's Law: WIP = Throughput x Cycle time
- Bottleneck throughput limits total system throughput, even if other stations are faster
- Utilization = busy time / available time
- Average flow rate through a balanced line is limited by the slowest process step
Vocabulary
- Throughput
- Throughput is the number of orders, items, pallets, or tasks completed by a system per unit of time.
- Cycle time
- Cycle time is the total time required for one item or order to move through a process from start to completion.
- Bottleneck
- A bottleneck is the process step with the lowest capacity that limits the output of the whole system.
- Work in process
- Work in process, or WIP, is the number of items or orders currently inside the system but not yet completed.
- Utilization
- Utilization is the fraction of available time that a worker, machine, dock, or process is actively doing productive work.
Common Mistakes to Avoid
- Confusing throughput with speed is incorrect because throughput counts completed units per time, while speed may describe how fast a conveyor or worker moves.
- Averaging all station capacities to find total warehouse capacity is wrong because the slowest required step usually controls the maximum flow.
- Ignoring waiting time in cycle time gives an unrealistically low value because orders often spend time in queues before picking, packing, or shipping.
- Adding more workers anywhere in the warehouse may not increase output because capacity only improves if the added labor reduces the current bottleneck.
Practice Questions
- 1 A packing area completes 360 orders in a 6 hour shift. What is its throughput in orders per hour?
- 2 A warehouse has an average throughput of 80 orders per hour and an average of 240 orders in process. Using Little's Law, what is the average cycle time in hours?
- 3 A warehouse has receiving capacity of 120 pallets per hour, storage putaway capacity of 90 pallets per hour, picking capacity of 110 pallets per hour, and shipping capacity of 100 pallets per hour. Which step should managers improve first to increase total throughput, and why?