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Theory OF Constraints

This document provides an overview of the Theory of Constraints (TOC). It defines a constraint as anything that limits an organization from achieving its goal, including inaccurate forecasts, unreliable processes, untrained workers, etc. The goal of TOC is to identify the system's main constraint, exploit it to maximize throughput, and subordinate all other decisions to addressing the constraint. The document outlines TOC's focusing steps and measurement process, and provides examples of thinking process tools used in TOC like the current reality tree. It concludes with a corporate example of TOC implementation at Euripa Lab.

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Pankaj Dogra
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147 views

Theory OF Constraints

This document provides an overview of the Theory of Constraints (TOC). It defines a constraint as anything that limits an organization from achieving its goal, including inaccurate forecasts, unreliable processes, untrained workers, etc. The goal of TOC is to identify the system's main constraint, exploit it to maximize throughput, and subordinate all other decisions to addressing the constraint. The document outlines TOC's focusing steps and measurement process, and provides examples of thinking process tools used in TOC like the current reality tree. It concludes with a corporate example of TOC implementation at Euripa Lab.

Uploaded by

Pankaj Dogra
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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THEORY OF

CONSTRAINTS.
BY:
GAGANDEEP KOUR
ROLL NO:41/06
C-101
BIBLIOGRAPHY:
 International Journal of management and
Organizational behaviour,Vol.8(6),page 540-558.

 Goldratt, Eli, ”THE GOAL”

 Some important internet sources:


 http://www.goldratt.com/
 http://www.rogo.com/cac/
 http://www.wikipedia.com/
 http://www.goldatt.com/AGI offices.html
WHAT IS A CONSTRAINT?
A constraint is anything that limits an
organization from achieving its goal.

 Two basic types of constraints:


 Physical constraint.
 Non-physical constraint.
SOME CONSTRAINTS ARE:
 INACCURATE FORECASTS.
 CLIENTS CHANGED THEIR MINDS.
 UNRELIABLE PROCESSES.
 UNRELIABLE SUPPLIERS.
 UNTRAINED WORKERS.
 UNDISCIPLINED MANAGEMENT.
 UNRELIABLE WORKERS.
GOAL OF A BUSINESS ORGN.
 Make money now as well as in the
future.
I. Provide a satisfying and secure
environment for employees now as
well in the future.
II. Provide satisfaction to the market
now as well as in the future.
WHAT IS THEORY
OF CONSTRAINTS?
TOC MEASUREMENT PROCESS :

 OPERATIONAL MEASURES
 Throughput(T)
 Inventory(I)
 Operating Expenses(O)

 FINANCIALMEASURES
 Net profit=T-O
 Return on Investment=(T-O)/I
 PERFORMANCE MEASURES
 Productivity = T/O
 Turnover = T/I
FOCUSSING STEPS:
1. IDENTIFY the system’s constraint(s).
2. Decide how to EXPLOIT the system’s constraint(s).
3. SUBORDINATE everything else to the above
decision.
4. ELEVATE the system’s constraint(s).
5. Go to step one, but DON’T allow INERTIA to cause
a system constraint.
THINKING PROCESS:
1) What to change?
 Identify the core problem.

2) To what to change to?


 Constructing a solution.

3) How to cause the change?


 Devising the implementation plan.
TOOLS OF THINKING
PROCESS:
1) CURRENT REALITY TREE .

2) THE EVAPORATING CLOUD.


THE FUTURE REALITY TREE.

3) THE PREREQUISITE TREE.


THE TRANSITION TREE.
CORPORATE EXAMPLE:

EURIPA LAB,
SILICON VALLEY ,
CALIFORNIA.
QUESTIONS??

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