There are simply too many factors to consider and a lot of elements at play. Granted, financial statements analysis is not something that can be easily learned. Plus, it also minimizes the risks of you being swindled by those who advise you on these matters, and surely you want to make sure of that, don’t you? That way, you will also feel more confident in your decisions. To a certain extent, this will let you keep a handle on most things, maintaining a degree of awareness about how the business is really performing, instead of simply and blindly going along with what your accountants tell you. That’s all well and good, but don’t you think it would be better if you knew a little more about the basics of financial statements analysis? It doesn’t mean that you should know the often too intricate processes and methodologies of analyzing financial statements, but only to get the basic idea or the gist of things. In short, in business language that they can understand. In fact, that is the reason why you hear about a lot of company executives leaving the job in the hands of staff members who they think have the right qualifications and knowledge.įor example, they’ll have their accountants do the reviewing – more formally, it is referred to as “financial statements analysis” – and then have them interpret the results and make recommendations in layman’s terms. Recently, there has been more and more interest in Kanban as a simple and effective method for managing software development and continuous improvement.For someone with very little to no background in accounting or financial matters, making business decisions based on the results of reviewing and analyzing financial statements and other financial reports can be quite intimidating. But, how (or may be why) Kanban works? Is it because it exposes the system and enables visual tracking of requests? Or is it due to limiting work-in-process and reducing the wasteful effect of task switching? Or may be due to frequent and granular feedback it provides to managers through simple measurements like cycle time and throughput? In this article, we will dig into details and study Kanban in the light of queuing theory and Little’s Law 1. #Relationship between wip and wipq queuing theory how to#Īlso, using case studies, we will illustrate three typical problems which face managers of Kanban development systems, and how to resolve them. This will reveal some basic concepts and insightful ideas about how Kanban works. In software development, this is how Little's Law is stated: Little’s Law (named after John Little) is one of the ideas which Kanban rests upon. It explains many complications of software development and inspires us with resolutions. #Relationship between wip and wipq queuing theory software# To analyze the dynamics of the next case studies, we will use Diagrams of Effects 2, which is an excellent tool for analyzing non-linear systems, or systems with more than two effects or influences affecting the system behavior. Case 1: Increase Team Throughput:Īdam is a coach of a team of two developers and one tester responsible for maintaining a large number of products in the company. In 2013, the company invested in marketing the product and managed to double the number of customers. Now, Adam’s team started to receive an increasing number of support requests. However, the CEO is not willing to increase the size of the team. In this case, in order to meet the growing number of customer requests, the team will have to increase their throughput. According to Little’s Law ( Th = WIP / CT), in order to increase the team throughput, either reduce the cycle time or increase the WIP. The team cannot reduce the cycle time because they have fixed capacity. So, the easy solution is to increase the WIP. The question is: Would increasing the WIP result in higher throughput? The answer is No. Larger WIP will increase throughput to a limit after which throughput will start decreasing as per the following graph:įigure 1. Relation between Throughput and WIPĪs described in the next graph, increasing the WIP will stimulate the team to optimize their work and remove kinds of wastes from their delivery process (yellow area) until the team reaches the maximum throughput possible (green peak). After that, more WIP may not cause any further improvement in contrary, it may decrease the team throughput due to stress and task switching (red area).įigure 2. Team response to increasing WIP according to the amount of WIPĪt the red area, team is overwhelmed with external factors and experience internal issues which decrease their productivity. The next diagram of effects analyses the team dynamics at the red area:įigure 3. #Relationship between wip and wipq queuing theory software#.#Relationship between wip and wipq queuing theory how to#.
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