Computing the Quantity Flow Through a Company Process Can Be Useful for Planning

Estimating an expected quantity flow through in a company process can be useful for effective planning.  A few examples of quantities that flow through a company process are customers, inventory, and requests.

If the flow rate of the quantity flowing through the process and the time of the process are known, the quantity that will flow through the process can be computed.  For example, how much inventory is needed (the flow quantity) for a future sales period?  If the flow rate (the sales rate) and the process time (the time during which the inventory will be sold) are know, the needed inventory (the quantity flow – the amount that will be needed during the process time) can be computed.    The inventory flow rate (the number of inventory items sold per period) can be based on historic values.  If during the previous 12 weeks, the average inventory flow rate (sales per week) is 10 items per week, then the expected quantity flow (amount of inventory needed) over the next 6 weeks would be 60 items (10 items per week times 6 weeks).

The equation for this computation is: Quantity Flowing Through the Process (QF) = Flow Rate (FR) times Flow Time (FT) or QF = FR x FT.

Although applying this equation to inventory (the quantity flowing through the process) and sales (the process) comes readily to mind, the equation can be usefully applied to many other company processes.  For example, suppose you want to estimate the number of sales orders (the quantity flow) that can be responded to over a period of time.  Knowing the past respond (flow) rate, an estimated quantity flow (number of sales orders) that can be responded to for a future period can be computed.  Some other examples that come to mind are the number of sandwiches that might be prepared per hour given a prepared rate and the number of patients that can be seen per day knowing how long it takes to see a patient.

A previous paragraph shows examples of computing quantity flows (QF) where flow rates (FR) and flow times (FT) are known.  But, the equation can also be used to compute either FR or FT, when the other two variables are known.  For example, if the inventory on-hand at the beginning of a period is known, the rate of sales (the flow rate, FR) can be computed in order to use up the on-hand inventory.  Or, how much flow time (FT) that will be necessary to sale a quantity on-hand (QF) at a given flow rate (FR) can be computed.   Another example is computing the number of guests arriving everyday (FR) at a bed & breakfast where the average stay is 4 days (FT), the bed & breakfast has 20 beds (FQ), and the bed & breakfast is always fully occupied.  Using the equation FR = FQ/FT gives FR equal to 5 (20/4) guests arriving each day.

Although a simple equation, QF = FR x FT has many useful applications for estimating quantities, rates, and times, from which more effective planning can be accomplished..