theory of constraints sim

A Dynamic Simulation of the Theory of Constraints

by Dave Guggenheim

Preface

• Systems dynamic models originated at MIT• Jay Forrester developed the concept• Richard Bennett created the first software• John Sterman wrote the business text

StockFlow

The Model Before ToC16,800 once per week

Randnorm(200, 5) per hour

Randnorm(500, 50) per 8-hour shift10 workers @ 50 units per shiftRandnorm(99, 5) per hour

Randnorm(1, 5) per hour

Randnorm(80, 10) per hour

Randnorm(150, 5) per hour

2,400 once per day

50% of failures per 4 hours

Inbound Logistics

Pre-Production

Production

Production Testing

Production Finishing

Outbound Logistics

Average Throughput = 11,000 units per weekShipping Capacity = 16,800 units per week

The Model After ToC16,800 once per week

Randnorm(200, 5) per hour

Randnorm(800, 80) per 8-hour shift16 workers @ 50 units per shiftRandnorm(99, 5) per hour

Randnorm(1, 5) per hour

Randnorm(80, 10) per hour

Randnorm(150, 5) per hour

2,400 once per day

50% of failures per 4 hours

Inbound Logistics

Pre-Production

Production

Production Testing

Production Finishing

Outbound Logistics

Average Throughput = 13,500 units per weekShipping Capacity = 16,800 units per week

In Conclusion

• The Theory of Constraints is as real as 3.1415926535…• Bottlenecks constrain throughput like a stomach stapling.• Bottlenecks require a tradeoff.

• Operating Expense for Inventory and Revenue• Bottlenecks migrate like a moose in rut.• Keeping tight control over production requires special

tactics and people (Jet Li Six Sigma Black Belt Sensei).