OPERATIONS MANAGEMENT

THE BATHTUB THEORY OF OPERATIONS MANAGEMENT

Submitted to: Prof. Marvin Yasay, MBA

Submitted by:
Group 2
Mary Rose Ocampo
Michele Garcia
Reena Martin
Ace San Gabriel
Jhonna Marie Catapang
INTRODUCTION

A process is any part of an organization that takes inputs and transforms them into outputs
that, it is hoped, are of greater value to the organization than original inputs. 1 It is also the
flow structure of an organization which is the main core for its activities on how their
product will be produced or deliver to its customers.

The bathtub theorem was first put forth by British professor Kenneth Boulding in his book
The Economics of Peace.2 What goes into a process must come out of the process. The
thoughput rate of a multi-stage process will be limited by the rate of its slowest task. One
should balance (make equal) the capacities (rates) of the sequential operations.

The slowest task or bottleneck is often due to an input resource being limited. The Theory
of Constraints says that to fix a bottleneck one should first decrease the rate at which
units are arriving at the bottleneck operation and then increase the capacity (rate) of the
bottleneck operation by adding input resources. Generally, if you add input resources to
an operation, the operation’s rate will increase and its inversic metric, the cycle time, will
decrease.3

FACTS OF THE PROBLEM/ CASE

The bathtub theory of operations management is being promoted as the next

breakthrough for global competitiveness. The factory is a bathtub with 50 gallons of
capacity. The drain is the outlet to the market and can output three gallons per hour when
wide open. The faucet is the raw material input and can let material in at rate of four
gallons per hour.

STATEMENT OF THE PROBLEM

a. Draw a diagram of the factory and determine the maximum rate at which the
market can be served if all valves are set to maximum. What happens to the
system over time?
 b. Suppose that instead of a faucet, a five-gallon container is used for filling the
bathtub (assume a full container is next to the tub to begin with), it takes two hours
to refill the container and return it to the bathtub. What happens to the system over
time?

CONCEPTUAL FRAMEWORK

The bathtub theory as similar to the accumulation or depletion of water in a bathtub due
to a difference in the rate of inflow (injections) and outflow (leakages) of water. Such an
explanation of an economic phenomenon popularly came to be termed by economists as
the application of the Bathtub Theorem. This approach was supposed to have been used
for the first time by Boulding in the 1940s in his book 'The Economics of Peace', in which
he compared the change in national income to the change of water level in a bathtub; the
production rate and consumption rate were similar to the injections and leakages
respectively. Accordingly, when production exceeds consumption the national income
rises and vice versa. Changes in national income can be explained similarly as arising
out of differences in other injections and leakages, for example exports and imports.4
ANALYSIS
a.
4 Gallon
per hour 50 Gallon
of capacity

3 Gallon
per hour

To determine the maximum rate at which the market can be served if all valves are
set to maximum we need to identify the data needed.
Bathtub capacity = 50 gallons
Input rate = 4 gallons/ hour
Output rate = 3 gallons/hour

As we input 4 gallons to the bathtub, there will be a 3 gallons output because the
capacity of the outlet is only 3 gallons.

System overflow time = Total capacity÷ (input-output rate)

50 gallons
= 50 gallons/ hours
4 gallons/hour – 3 gallons/hour
 The water level is the company’s stock value while the input represents a company’s
productions, investment and others.
The output is the leakage of the tub which signifies company’s consumptions, taxes
and other expenses.

There will be an overflow of 1 gallon per hour. This 1 gallon signifies the stock value
or the income of the company.

b.

Input rate= 5gallon per 2hours= 2.5 gallons per hour

Output rate = 3 gallons per hour
System flow =Input rate- output rate
=2.5-3 gallons per hour
= -0.5
Input rate is slower than output rate 0.5 gallons. As the input rate of the company slower
than its output, the stocks will run out.

REFERENCES:
1 Chase, Aquilino, Jacobs. Operations Management for Competitive Advantage 10 th Ed.,
USA: McGraw-Hill.
2www.universalcargo.com/the-bathtub-theory-of-economics-and-life/

3https://www.coursehero.com/file/p2gr7o0/29-Bathtub-Theory-of-Operations-

Management-What-goes-into-a-process-must-come/
4http://timesofindia.indiatimes.com/home/sunday-times/What-is-the-Bathtub-

Theorem/articleshow/2964379.cms