Report about " Theory of Constraints".

1. THEORY OF CONSTRAINTS
Prepared By:
MONZALES, MARIBEL T.

2. THEORY OF CONSTRAINTS
• It was created by Dr Eli Goldratt and was
published in his 1984 book "The Goal."
• A methodology for identifying the most
important limiting factor.
• An organizational change method that is
focussed on profit improvement.
• The theory says that every system, no matter
how well it performs, has at least one constraint
that limits its performance – this is the system's
"weakest link.

3. THEORY OF CONSTRAINTS

4. CONCEPT OF CONSTRAINTS
Big Question!
Is there something that is
constraining your project from
reaching its GOALS?

5. SYSTEMS AS CHAINS
Assume a system to be a chain with a goal of
transmitting force from A to be.

6. SYSTEMS AS CHAINS
WEAKEST LINK
 The link at which the system fails.

7. STRENGTHENING THE CHAIN
Where should we focus our efforts?

8. THROUGHPUT, INVENTORY
&OPERATING EXPENSE
Goldratt created a simple relationship chart between three
system-level measurements: throughput, inventory & operating
expense.

9. Given Goldratt’s three dimensions,
organizations have three different options for
system improvement: increasing THROUGHPUT,
reducing INVENTORY or reducing OPERATING
EXPENSE.

10. The potential for increasing THROUGHPUT tend to
be much higher than the potential for decreasing
INVENTORY AND OPERATING EXPENSE. Therefore, a
basic model for system improvements focuses on
increasing THROUGHPUT and making reduction of
INVENTORY and OPERATING EXPENSE a secondary
priority , as shown below.

11. THEORY OF CONSTRAINTS
EXAMPLES:
Machine/equipment
Manpower
Resources
Process
No overtime
Insufficient materials
Insufficient demand

12. APPLYING THE THEORY

13. APPLYING THE THEORY
Step 1: Identify the Constraint
The first step is to identify your weakest link –
this is the factor that's holding you back the
most.
INTERNAL
Process Constraints
-Machine
-Equipment
Policy Constraints
-No overtime
EXTERNAL
Material Constraints
-Insufficient Materials
Market Constraints
-Insufficient Demand

14. APPLYING THE THEORY
 As a numerical example , consider the operation
producing product in the figure.
QUESTION:
Which process has the constraints?
PROCESS 1
Capacity=
5 per hour
PROCESS 3
Capacity=
4 per hour
PROCESS 4
Capacity=
9 per hour
PROCESS 2
Capacity=
7 per hour
CONSTRAINT
INPUTS OUTPUTS

15. APPLYING THE THEORY
Step 2: Exploit the constraints
 Find methods to maximize the utilization of the
constraints towards 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.

16. DECIDE HOW TO EXPLOIT THE
CONSTRAINTS
QUESTION:
WHAT CAN WE DO TO GET THE MOST
OUT OF THIS CONSTRAINTS WITHOUT
COMMITTING TO POTENTIALLY
EXPENSIVE CHANGES?
INPUTS OUTPUTS

17. APPLYING THE THEORY
Step 3: Subordinate and synchronize to
the constraints
“SUBORDINATE EVERYTHING TO THE
CONSTRAINTS”
OUTPUTSINPUTS

18. APPLYING THE THEORY
“SUBORDINATE EVERYTHING TO THE
CONSTRAINTS”
PROCESS3
Capacity=
6 per hour
Capacity
Increased at
Process 3
OUTPUTS
INPUTS

19. APPLYING THE THEORY
Step 4: Elevate the performance of
constraint
“ELEVATING” the constraint means we take
whatever action is required to eliminate the
constraint.

20. APPLYING THE THEORY
Step 5: Repeat the process
PROCESS 1
Capacity=
5 per hour
PROCESS 2
Capacity=
7 per hour
PROCESS 3
Capacity=
6 per hour
PROCESS 4
Capacity=
9 per hour
THE CONSTRAINT

21. APPLYING THE THEORY
Step 5: Repeat the process
Go back to step 1, but
beware of inertia.

22. THANK YOU!