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Theory of constraint

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  • 1. The Theory of Constraints Now that we know the Goal, how do we use it to improve our system? 8/27/04 Paul A. Jensen Operations Research Models and Methods Copyright 2004 - All rights reserved
  • 2. 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.
  • 3. Step 1: Identify the system’s constraint(s).
    • What is the Goal?
    • What is Throughput?
    • What is Inventory?
    • What is Operating Expense?
  • 4. Step 2: Decide how to exploit the system’s constraint(s).
    • What is the constraint?
    • How do we get as much throughput as possible?
  • 5. Step 3: Subordinate everything else to the decisions of Step 2
    • Throughput?
    • Inventory?
    • Operating Expense?
  • 6. Step 4: Elevate the system’s constraint(s).
    • Throughput?
    • Inventory?
    • Operating Expense?
  • 7. Step 5: If a constraint is broken in Step 4, go back to Step 1.
    • What might happen if the constraint is elevated?
  • 8. Summary: 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.
  • 9. Application in Manufacturing
  • 10.
  • 11. Step 1: Identify the system’s constraint(s).
    • What is the Goal?
    • What is Throughput?
    • What is Inventory?
    • What is Operating Expense?
  • 12. 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.
  • 13. 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?
  • 14. Step 2: Decide how to exploit the system’s constraint(s).
  • 15. 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?
  • 16. What and how much to produce?
    • P: TP/Unit = 45, B Min/Unit=15
    • Q: TP/Unit = 60, B Min/Unit=30
  • 17. 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?
  • 18. Step 3: Subordinate everything else to the decisions of Step 2.
  • 19. 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?
  • 20. Step 4: Elevate the system’s 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?
  • 21. 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?
  • 22. 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?
  • 23. Summary: 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.