Theory of Constraints(TOC)

1. A SEMINAR ON
Presented by-
SARANG SANJAY DESHMUKH
Department of Production Engineering
K. K. Wagh Institute of Engineering Education & Research
Nashik-42003
(2013 – 2014)
Guided by-
Prof. K.S. PATIL

2.  TOC was developed by Dr. Eliyahu Goldratt, a Israeli physicist in the
mid 1980’s with his business novel The Goal.
 Initially Dr. Eliyahu invented a software named OPT This software
package quickly and effectively scheduled production in even
complex environments by separating bottleneck and non-bottleneck
operations.
 But as this was introduced under license hence many of its topics
were not clearly understood and couldn’t fetch the attention of
scientists.
 Hence Dr. Goldratt published his book named as ‘The Goal’ in
1987, in which he suggested and explained TOC after which
TOC was widely implemented in various fields.

3.  The Theory of Constraints is a
management policy which provides the determination of the factors
which limits a company reaching its objectives and the application of
necessary changes to remove these factors generally known as
constraints.
 TOC drives manager to attack these constraints in order to reach the
company's primary goal-i.e. to make Money
 TOC views System as Chain
 Number of links together form a chain in similar manner as number
of elements are responsible for System’s formation.
 TOC determines an element which limits the system progress and
suggest remedy for eliminating that element(Constraint).

4.  A Constraint is anything that prevents the system from achieving
more of its goal. There are many ways that constraints can show up,
but a core principle within TOC is that there are not tens or hundreds
of constraints. There is at least one and at most a few constraint in
any given system.
 Constraints can be internal or external to the system.
 There is no choice in the matter of constraints; either you manage the
constraints or they manage you.
 The constraint will determine the output of the system whether they
are acknowledged and managed, or not.
 The system is as strong as its constraint's

5. TYPES OF
CONSTRAINTS
BEHAVIORAL
CONSTRAINT
Eg. Workers attitude, mental
state, mood, etc.
MANAGERIAL
CONSTRAINT
Eg. Management Policies.
CAPACITY
CONSTRAINT
Eg. When Demand > Actual
capacity.
MARKET
CONSTRAINT
Eg. When Demand < Actual
capacity.
LOGISTICAL
CONSTRAINT
Eg. Problems due to
Planning and control
system.

6. 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. Elevate the Constraint
5. Repeat for the new
Constraint

7.  Drum-Buffer-rope scheduling method- The DBR process was designed as a means of
implementing the five-step process of continuous profit improvement. It is used to represent how a
factory should be scheduled based on TOC. The DBR methodology consists of three elements:
 Drum
 The drum is the schedule for the system’s constraint(s) and represents a portion of the
exploitation phase of the five-step improvement process. It is used to maximize the available
time of the constraint and to create the master production schedule (MPS). Like the bass
drum in a marching band, it is the drumbeat of the manufacturing facility. All other resources
produce in synchronization to the constraint’s schedule.
 Buffer
 The buffer is a time mechanism used to allow for those things that will go wrong, and it
determines the lead time for products from the gating operations. The buffer is equal to the
processing time plus the setup time plus an estimate of the aggregated amount of protective
time required to ensure that the product will get to the buffer origin when needed.
 Rope
 The rope is the synchronization mechanism for the other resources and consists of the release
schedule for all gating operations. Technically the rope is equal to the constraint schedule
date minus the buffer time. The release of material determines the timing for parts being
processed on the nonconstraint resources.

8.  The thinking processes are a set of tools to help managers walk
through the steps of initiating and implementing TOC.
 Tools of Thinking processes of TOC
TOOLS OF THINKING
PROCESS
Current
Reality
Tree(CRT)
Evaporating
cloud(EC)
Future Reality
Tree(FRT)
Transition
Tree
Prerequisite
Tree(PT)
What to
Change?
What to
Change to?
How to
Change?

9.  FINANCIAL
MEASUREMENT
 Net Profit- An absolute
measurement in rupees
 Return on Investment- A
relative measurement based on
investment.
 Cash Flow- Money coming in
VS money coming out
 OPERATIONAL
MEASUREMENT
 Throughput- Money flowing In
 Rate at which a system generates
money through sales
 Inventory- Money inside company
▪ Inventory refers to all the
money that the system has
invested in things that are
expected to be sold.
 Operating Expenses- Money
flowing Out
▪ All the money a system
spends in turning inventory
into throughput

10.  Potential for tremendous increases in productivity with minimal
changes to operations.
 Most powerful and cost effective tool for increasing production
capacity.
 Very simple to communicate and apply, making it ideal for shop floor
teams.
 Great for fostering teamwork as different areas become aware of the
constraint and the need to work together to assist the constraint
process.
 It provides immediate and very tangible benefits.
 Allows growth of turnover/productivity without the need for
additional space or staff.
 Provides a means to evaluate the true value of changes (using T, O, I),
and utilize this to select the best options, and drive the right
behavior/decisions.

11.  The considerable length of training time required to achieve mastery
of the theory.
 The considerable length of time required to complete the problem
identification and solving process.
 The need for the cooperation and enthusiasm of all the people
involved with the problem, and
 Its over reliance on group work.

12.  Background-
• Case study was carried out in a Electromechanic factory located
in Istanbul.
• This factory is a supplier of keys.
• The problem face by the factory was that it was lacking in
manufacture of the required quantity of keys as demanded by
the company. i.e. The company's demand was 500quantity of
keys whereas this firms capacity was 450 quantity of keys in
given time.
• Then so as to increase productivity TOC was implemented and
results were as discussed below-

13. Step1. Identify the Constraint-
o This steps focuses on finding the constraints that limits the firms capacity.
o Hence , the table indicating firms current capacity was prepared.(refer table 1)
o From table the column current indicates current processing time of firm and the column Total indicates
the processing time required to produce 500 keys.
o It clearly shows that all other operation have required processing time less than the current processing
time, except the plastic injection machine.
o This indicates that the constraint is the Plastic injection machine

14.  Step2 - Exploiting the Constraint
o The machine is continuously working even during meal breaks and other breaks.
o An operator works on machine every time so there is nothing to do on this phase, it’s
time to examine the next phase.
 Step3- Subordinating everything else-
o In this step other resources are managed to get maximum efficiency at constraint point.
o But here it seems that plastic injection is the initial operation so late supply of raw
material was examined but there seemed no fault in it.
 Step4 – Elevating the systems Constraints.
o The process of plastic injection was examined. From table it was observed that setup
time of plastic injection could be controlled.
o Hence a PLC(Programmable Logic control) system was used to reduce the setup time
of injection machine.

15. o The use of PLC system reduced the setup
time from 20mins to 1 min. And eventually
reduced the processing time of Plastic
Injection Machine to1hr. 26 mins.
The adjacent table shows the same.
Step5 –Back to Step 1
o As observed in table below the factory now
has its increased productivity and company's
demand is fulfilled.
o Now another constraint arises i.e. Market
constraint and hence back to step 1 to
eliminate it.

16.  Hence with help of above case study we can conclude that
TOC, with its Five focusing steps and all of its related
philosophy including Thinking process and drum buffer-rope
scheduling method, provides an approaches for identifying and
exploiting bottlenecks in the organization.
 These steps of TOC leads to improvements in operations,
decrease in lead time, decrease in cycle time, improves the
due date performance, throughput increases and eventually
contributes in improvement of the whole system.

17. THANK YOU