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Theory of Constraints

The document outlines the five steps of the Theory of Constraints: 1) identify constraints, 2) decide how to exploit constraints, 3) subordinate other decisions to exploiting constraints, 4) elevate constraints, 5) repeat the process if constraints change. It provides examples of applying the steps in a manufacturing system to maximize throughput.

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Saras Agrawal
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94 views

Theory of Constraints

The document outlines the five steps of the Theory of Constraints: 1) identify constraints, 2) decide how to exploit constraints, 3) subordinate other decisions to exploiting constraints, 4) elevate constraints, 5) repeat the process if constraints change. It provides examples of applying the steps in a manufacturing system to maximize throughput.

Uploaded by

Saras Agrawal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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The Theory of Constraints

Now that we know the Goal, how


do we use it to improve our
system?

Paul A. Jensen
Operations Research Models and Methods
8/27/04 Copyright 2004 - All rights reserved
The Theory of Constraints
Step 1: Identify the system's constraint(s).
Step 2: Decide how to exploit the system's
constraint(s).
Step 3: Subordinate everything else to the
decisions of Step 2.
Step 4: Elevate the system's constraint(s).
Step 5: If a constraint is broken in Step 4, go
back to Step 1.

2
Step 1: Identify the systems
constraint(s).

What is the Goal?


What is Throughput?
What is Inventory?
What is Operating Expense?
3
Step 2: Decide how to exploit
the systems constraint(s).

What is the constraint?


How do we get as much throughput as
possible?
4
Step 3: Subordinate everything else
to the decisions of Step 2

Throughput?
Inventory?
Operating Expense?
5
Step 4: Elevate the systems
constraint(s).

Throughput?
Inventory?
Operating Expense?
6
Step 5: If a constraint is broken
in Step 4, go back to Step 1.

What might happen if the constraint is


elevated?

7
Summary: The Theory of
Constraints
Step 1: Identify the systems constraint(s).
Step 2: Decide how to exploit the systems
constraint(s).
Step 3: Subordinate everything else to the
decisions of Step 2.
Step 4: Elevate the systems constraint(s).
Step 5: If a constraint is broken in Step 4, go
back to Step 1.

8
Application in Manufacturing

9
10
Step 1: Identify the systems
constraint(s).

What is the Goal?


What is Throughput?
What is Inventory?
What is Operating Expense?

11
To Identify the Resource
Constraint
Compute the load on each production
resource assuming market demands.
Compare the resource loads with the
resource capacities.
Those resources for which the loads exceed
the capacities are constraints (bottlenecks).
If no production resource load exceeds its
capacity,
the market demands are the constraints.
the constraints are external to the manufacturing
system.
12
Compute the loads and
compare with capacities.
Production P=100, Production Q=50
A: Load =2000, Capacity = 2400 Minutes
B: Load =3000, Capacity = 2400 Minutes
C: Load =1750, Capacity = 2400 Minutes
D: Load =1250, Capacity = 2400 Minutes
What is the constraint?

13
Step 2: Decide how to exploit
the systems constraint(s).

14
Exploiting the constraint
Assume a single constraint is identified.
Rank the products in order of the ratio:
Throughput dollars per minute of constraint use.
Select the product mix so that the products
with greater ratios are produced in preference
to the products with smaller ratios.
What goal is this method trying to achieve?
How does this method achieve the goal?

15
What and how much to
produce?
P: TP/Unit = 45, B Min/Unit=15

Q: TP/Unit = 60, B Min/Unit=30

16
Calculate Solution
Produce as much P as possible

Use the remainder of the constraint resource


for Q

What is the profit for this product mix?

17
Step 3: Subordinate everything
else to the decisions of Step 2.

18
Subordinating Production
Production P=100, Production Q=30
A: Load =1800, Capacity = 2400 Minutes
B: Load =2400, Capacity = 2400 Minutes
C: Load =1650, Capacity = 2400 Minutes
D: Load =1150, Capacity = 2400 Minutes
What determines the load on the non-
constraints?

19
Step 4: Elevate the systems
constraint(s).
Where should process
improvements be
focused?
What is the benefit of
elevating the
constraint?
What is the benefit of
elevating a non-
constraint?

20
Step 5: If a constraint is broken
in Step 4, go back to Step 1.
What might
happen if the
constraint is
elevated?
What happens if
there are no more
internal
constraints?

21
Say we add another machine
of type B.
Production P=100, Production Q=50
A: Load =2000, Capacity = 2400 Minutes
B: Load =3000, Capacity = 4800 Minutes
C: Load =1750, Capacity = 2400 Minutes
D: Load =1250, Capacity = 2400 Minutes
How much should we produce?
What is the new constraint?
How do we elevate the new constraint?
22
Summary: The Theory of
Constraints
Step 1: Identify the systems constraint(s).
Step 2: Decide how to exploit the systems
constraint(s).
Step 3: Subordinate everything else to the
decisions of Step 2.
Step 4: Elevate the systems constraint(s).
Step 5: If a constraint is broken in Step 4, go
back to Step 1.

23

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