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Theory of Constraints: Goldratt in His 1984 Book Titled The Goal, That Is

1. The Theory of Constraints is a management philosophy that focuses on identifying the constraint in a system that limits overall throughput and improving how that constraint is managed. 2. The core steps of TOC are to identify the constraint, exploit it to maximize its usage, subordinate all other processes to support the constraint, and elevate the constraint if possible. 3. Multiple buffers are often used in TOC to protect constrained resources and material from delays upstream in the production process. Identifying and managing constraints effectively can improve overall plant throughput.

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30 views

Theory of Constraints: Goldratt in His 1984 Book Titled The Goal, That Is

1. The Theory of Constraints is a management philosophy that focuses on identifying the constraint in a system that limits overall throughput and improving how that constraint is managed. 2. The core steps of TOC are to identify the constraint, exploit it to maximize its usage, subordinate all other processes to support the constraint, and elevate the constraint if possible. 3. Multiple buffers are often used in TOC to protect constrained resources and material from delays upstream in the production process. Identifying and managing constraints effectively can improve overall plant throughput.

Uploaded by

Harsh Shah
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Theory of

constraints
 Theory of Constraints (TOC) is an overall
management philosophy introduced by Dr. Eliyahu M.
Goldratt in his 1984 book titled The Goal, that is
geared to help organizations continually achieve their
goal.

 The title helps in achieving more of its goal by a very


small number of constraints, and that there is
always at least one constraints.
Definitions
 A bottleneck is any resource with a capacity equal to
or less than the demand placed upon it

 A constraint is anything that limits a system’s


performance, relative to the system goal
Core of TOC
 There is a constraint in the system

If you don’t impact the


constraint, you have
no effect
Assumptions of Toc
The underlying assumption of Theory of Constraints is
that organizations can be measured and controlled
by variations on three measures:

 Throughput
 Operating expense
 inventory
Steps of
TOC
The TOC process seeks to identify the constraint and
restructure the rest of the organization around it,
through the use of the Five Focusing Steps:
1. Identify the Constraint

2. Exploit the Constraint

3. Sub ordinate
everything to the
Constraint

4. Elevat
e the
Constr
aint
Improving the Process using
TOC
Principles…
Identify the Constraint

 This implies the need to examine the entire process to


determine which process limits the throughput.
Fundamental
Principles
 As a numericalof theconsider
example, TOCthe… operation
producing product A in Figure.

How many A's can we


produce in an hour????
Exploit the Constraint

 Find methods to maximize the utilization of the


constraint toward productive throughput.

 For example, in many operations all processes are


shut down during lunchtime or during breaks.

 If a process is a constraint, the operation should


consider rotating lunch periods so that the constraint
is never allowed to be idle.
Subordinate Everything to the
Constraint
 Effective utilization of the constraint is the most
important issue. Everything else is secondary.

Elevate the Constraint


 Essentially this means to find ways to increase the
available hours of the constraint, including adding
more of it.
Once the constraint is a constraint no longer, find the
new one and repeat the steps

 As the constraint effective utilization increases, it may


cease to be a constraint as another process
becomes one.

 In that case the emphasis shifts to the new process


constraint.

 It is also possible that a sales-related change in the


product mix will cause a different process to become
the constraint.
Understanding and
Managing
The
 A system Optimal Constraints
performance is not the sum of
local Optima.

Local efficiency Vs. Global Throughput


1. Identify And How To Exploit The System Constraint

2. Subordinate The Constraint

3. Elevate The System Constraint


Buffers
 They appear as part of the EXPLOIT and
SUBORDINATE steps of the five focusing steps.

 Buffers are placed before the key constraint, thus


ensuring that the constraint is never starved. Buffers
used in this way protect the constraint and should
allow for normal variation of processing time and the
occasional upset before the constraint.
Multiple-time
Buffers
 Time buffers are used to make sure the constraint is
not "starved," but other time buffers are also
necessary.

An example may help to Illustrate:

 Suppose you have a product made from three


components.

 Component 1 is processed from raw material and then


assembled with component 2 after it is processed
from raw material after that Processing Operation is
start in component 3
Multiple-time
Buffers…
Multiple-time
Buffers…
 The subassembly is then assembled with component
3 after it is processed from raw material.

 The final product is then shipped to the customer.

 The constraint in the system is located in the middle of


the processing for component 1.
Multiple-time
Buffers…
 Component 1 has been processed on the constraint,
its value to the system has risen significantly because
constraint time has been invested.

 Nothing should, therefore, impede the progress of


component 1.

 The problem could arise, however, that component 1


will arrive at the Assembly 1 area before component 2
because of some problem with component 2.
Multiple-time
• Buffers…
Since we would never want constraint-invested
material to wait for non-constrained material, we
should stage a time buffer of material for component 2
before the Assembly 1 area.

• This is done by releasing it earlier-the amount earlier


depending on the time buffer based on the time
estimate needed to overcome any unanticipated shock
in the system.

• In this case the time buffer is called an assembly time


buffer, as opposed to the time buffer before the
constraint, which is usually called a constraint time
buffer.
Multiple-time
Buffers…
 The same argument applies to the Assembly 2 area.

 The subassembly from components 1 and 2 have


constraint time invested, so we would not want them
waiting for component 3.

 This calls for another assembly time buffer to be


generated at the Assembly 2 area.

 Unfortunately, the need for buffers has not been


fulfilled.
Multiple-time
Buffers…
It is possible that the final product with its constraint-
invested material could be held up at shipping, since
the processes that take place between assembly and
shipping have not been part of the protection.

This implies an additional time buffer before the shipping


area, referred to as a shipping time buffer.
Multiple-time
Buffers…
PLANT TYPES

PLANT TYPES

I- A- V- T
Plan Plant Plant Plant
t
Applications of Theory of
Constraints
There are various applications of toc:

 Operations
 Finance and accounting
 Project management
 Marketing and sales
Real business
• The Lessons example
plant of Baxter International makes medical products
such as sterile bags. Management of the plant is actually aware of
the necessity to actively manage its constraints. For example, when
materials are a constraint, management may go to a secondary
vendor and purchase material at a higher cost than normal. When a
machine is the constraint, a weekend shift is often added on the
machine. If a particular machine is chronically the constraint and
management has exhausted the possibilities of using it more
effectively, then additional capacity is purchased. For example when
the constraint was the plastic extruding machines, a new extruding
machine was ordered. However even before the machine arrived,
management had determined that the constraint would shift to the
blenders once the new extruding capacity was added. Therefore a
new blender was already planned. By thinking ahead and focusing on
the constraints, management is able to increase the plant's real
capacity at the lowest possible cost.
Conclusion
 What is the Theory of Constraints and How Should it
be Implemented?","Beyond The Goal". That is
acknowledges the sources of information and
inspiration for the Thinking Processes and Critical
Chain methodologies. Theory of Constraints
referenced foundational materials. "Standing on
the Shoulders of Giants" .

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