Operations Management Theory of Constraints TOC Handout Dr. Ahmad Syamil

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Operations Management Theory of Constraints (TOC) Handout Dr. Ahmad Syamil

Theory of Constraints (TOC) An administration reasoning created by Dr. Eliyahu Goldratt that can be seen as three particular however interrelated zones: Logistics, e.g., cushion administration Performance estimation, e.g., throughput The five centering steps

Related Terms Constraint administration Synchronous/synchronized assembling (General Motors) Optimized Production Technology (OPT) programming Drum-Buffer-Rope framework Throughput innovation

Relationships Between Throughput, Inventory, Operating Expenses and Profit Transparency 17.10 (Exhibit 17.9)

Exhibit 17.10 A Constrained Production Process

Exhibit 17.10 (without TOC) A has a higher benefit/unit - > max. A Production procedure for A: 100 units x 0.4 hours/unit = 40 hours Remaining time for B: 60 hours - 40 hours = 20 hours 20 hours/(0.2 hours/unit) = 100 units Profit: For A: 100 units x $80/unit = $8,000 For B: 100 units x $50/unit = $5,000 Total = $13,000

Types of Constraints Internal Resource = asset inside association which limits execution Market = showcase request not as much as creation limit Policy = Any arrangement that breaking points execution Transparency 17.11

The Five Focusing Steps in Theory of Constraints 1. Recognize the framework's imperatives 2. Decide how to endeavor framework's imperatives 3. Subordinate everything else to the choice made in step 2 4. Lift the imperatives keeping in mind the end goal to achieve higher execution level 5. Backpedal to step 1. Try not to give idleness a chance to wind up distinctly new requirement Transparency 17.12

Constrained Resource Utilization for Each Product Transparency 17.13 (Exhibit 17.11)

Exhibit 17.10 (with TOC) B has a higher benefit/hour - > max.B. Generation prepare for B: 200 units x 0.2 hours/unit = 40 hours Remaining time for A: 60 hours - 40 hours = 20 hours 20 hours/(0.4 hours/unit)= 50 units Profit: For A: 50 units x $ 80/unit = $4,000 For B: 200 units x $50/unit = $10,000 Total = $14,000 versus $13,000 (without TOC)

Effect of Increasing Size of Process Batch Transparency 17.14 (Exhibit 17.12)

Effect of Decreasing Transfer Batch Size Transparency 17.15 (Exhibit 17.13)

The Drum = Constraint = Bottleneck Operation It sets the rate of every other operation to match its own particular The Buffer = Inventory 1. Time supports = requirement cradles = crude materials or work in process (WIP) inventory. Area: a. Before bottleneck forms/operations b. At areas where parts from the bottleneck are joined with parts from different procedures/operations Function: To keep those operations from shutting down (="starving"= no materials) because of issues at non-bottleneck assets. 2. Stock supports = shipping cushions = inventories of completed merchandise held in anticipation of market request. Area: After the last operation/get together process The Rope = linkage = correspondence to keep the development or the deficiency of stock. Illustrations: formal generation plan and casual examinations between workers. Areas: (1) a rope imparting from completed products stock back to the drum to increment or abatement yield, and (2) a rope from the drum back to the material discharge point, indicating how much material is required. TOC: Drum, Buffer, and Rope

Network Flow Diagram with One Bottleneck Transparency 17.16 (Exhibit 17.14)

Comparison of MRP, JIT and TOC MRP JIT TOC Loading of operations Batch sizes Importance of information precision Speed of booked improvement Flexibility Cost Goals Planning center Production premise Checked by limit prerequisites Planning a short time later One week or more Critical Slow Lowest Highest Meet request Have feasible arrangement Master Plan Controlled by kanban framework Small as conceivable Unnecessary Very quick Highest Lowest Meet request Eliminate squander Final get together timetable Need Controlled by bottleneck operation Variable to adventure requirement Critical for bottleneck and feeder operations Fast Moderate Meet request Maximize benefits Bottleneck Need and plan Transparency 17.17 (Exhibit 17.15)