Glossary ยท concept
Work-in-Process (WIP)
The total stock of all semi-finished items that have begun but not yet completed production, waiting between or being processed at stations.
WIPWork in ProgressIn-Process InventorySemi-Finished Goods Inventory
Work-in-Process (WIP) is the total quantity or monetary value of all parts in a production system that have passed the raw-material stage but not yet exited as finished goods. WIP is interpreted as the 'water level' of the production system; under Little's Law it is bound in the mean as WIP = Throughput ร Lead Time (Little 1961). This equation expresses mathematically that, under fixed throughput, reducing WIP reduces lead time, and is one of the central arguments of lean manufacturing. Financial weight of WIP: in SMBs, 15โ40% of total working capital is typically locked in WIP. When WIP is high, lead time stretches, quality problems are discovered late, the shop floor becomes physically congested, and capital is tied up. WIP-reduction tools include kanban (mathematical capping), small lot sizes, SMED-driven short setups, and cellular production. Job-shop scheduling, assembly line balancing, aggregate production planning, and the Joint Replenishment Problem all carry an explicit WIP-holding cost in their cost functions. Operationally, WIP is measured via periodic physical counting or MES (Manufacturing Execution System) tracking. References: Little 'A Proof for the Queuing Formula L = ฮปW' (1961); Hopp and Spearman 'Factory Physics' (1996); Goldratt and Cox 'The Goal' (1984).
รrnek
A 45-person SMB in Manisa processing parts for white-goods manufacturers carries an average of 850 parts of WIP on a 7-station line. The line throughput is 320 parts per day; by Little's Law lead time = 850/320 = 2.66 days. To reduce WIP to 500, lot size drops from 100 to 30 and lead time falls to 1.56 days; while throughput is held constant, tied-up capital decreases by about 280,000 TL.