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Production Planning and Control

Theory of ConstraintsG.PrabuBUB0910004 M. Sc. (Engg.) in EMM

K.Sathish BabuBUB0910006

Module Leader : Asst Prof K.N.Ganapathi Asst. Professor, MSRSAS, BangaloreM. S. Ramaiah School of Advanced Studies

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Theory of Constraints Aim :To get an idea of the term Theory of constraints which commonly used in Manufacturing industries now a days

Objectives : Introduction to the topic Theory of constraints. Analysis of the topic with a relevant data.

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TOC Introduction Theory of constraints is an overall management philosophy

developed by the Eli-Gold ratt in his book titled The goal it is geared to help organizations to achieve their goal Continuously This is also called Optimized Production Technology, which

revolves around the concept of bottlenecks Bottleneck is a resource whose cap greater than demand

downstream Non-bottleneck is a resource whose cap less than demand

downstreamM. S. Ramaiah School of Advanced Studies

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Theory of ConstraintsAny system can produce only as much as its critically constrained resource

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TOC Production Approaches

Five Focusing Steps Drum Buffer Rope

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Theory of ConstraintsFive Focusing Steps Identify the bottleneck or constraint Exploit the bottle neck Subordinate everything else to the bottle neck Elevate the bottle neck Evaluate whether solving the current bottle neck

Drum-Buffer-Rope 3 elements of the solution The drum or constraint or weakest link, the buffer or material

release duration, and the rope or release timing. To protect the weakest link in the whole system, by

eliminating by process dependency and variations.M. S. Ramaiah School of Advanced Studies

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TOC IllustrationTOC is about identifying the most significant constraint in a system and removing this constraint. A constraint in terms of TOC is a bottleneck. Think of TOC in terms of a car which is going to be used for a race.We buy a regular road car and want to get it on the track to

race.The objective of the race is to complete 20 laps of the track in

as short a time as possible.

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TOC IllustrationThe constraints are listed: Constraint 1. The car is reliable and works fine. However, engine parts are expensive when required. Constraint 2. The car needs to be registered to race. Without registration, it cant even go on the track. Constraint 3. The car needs to be repainted. The sponsors require red paint within a year or they will withdraw the sponsorship.

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TOC Illustration Constraints 1 and 3 dont prevent the car from racing. However, constraint 2 means the car cant race at all. According to TOC, the most severe constraint should be

eliminated Therefore, address Constraint 2 first (i.e. get the car registered)

Once, Constraint 2 has been eliminated, there will be a new most severe constraint. Repeat the process of identifying & eliminating the constraint Every time we eliminate the most severe constraint we improve

the quality and performance of the system.M. S. Ramaiah School of Advanced Studies

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4 Steps to Managing TOC Recognize the bottleneck operation and determine the

throughput contribution in the whole system.

Find the bottleneck operation by identifying operations with

large quantities of inventory operations.

Keep the bottleneck busy and subordinate all non -

bottleneck operations to the bottleneck operations.

Take actions to increase bottleneck efficiency and capacityM. S. Ramaiah School of Advanced Studies

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TOC 7 key Principles Balance /optimise the FLOW, not maximise capacity. Utilisation & activation of a resource are not synonymous. Bottlenecks govern both throughput & inventories. The size of transfer batch need not be equal to process batch. An hour lost at the bottleneck is an hour lost for the entire

system. The bottleneck & Processes lying downstream are forward

scheduled, from the present to finite cap. Lot sizes should be varied depending on components so as to

achieve a smooth and timely flow of material to customer.M. S. Ramaiah School of Advanced Studies

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TOC - Advantages Improves capacity decisions in the short-run Aids in process understanding Avoids local optimization Improves communication between departments Reduction in inventory More productive machine and more flexible Ability to meet shorter lead time Better customer service and relationship

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TOC - Disadvantages Negative impact on non-constrained areas Ignores long-run considerations May lead organization away from strategy Not a substitute for other accounting methods Temptation to reduce the capacity

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ConclusionsTOC was originally designed for improving manufacturing processes. However, it has been adapted and successfully used in many industries including; Marketing, Service Industries and Information Technology.

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References1. Author unknown, Theory of Constraints , http://en.wikipedia.org/wiki/Theory_of_Constraints, retrieved on 29 th March 2011 Author unknown, Theory of Constraints, http://www.wepapers.com/Papers/113031/Theory_of_Constraints.ppt, retrieved on 29th March 2011 Author unknown., Theory of Constraints, www.linkedin.com/answers/business-operations/projectmanagement/OPS_PRJ/680734-5146643,retrieved on 29th March 2011 Asst prof K.N.Ganapathi, Production Planning and Control , Course Notes, M.S. Ramaiah School of Advanced Studies, Bangalore, March 2010. Author unknown., Theory of Constraints, http://www.12manage.com/methods_goldratt_theory_of_constraints.ht ml , retrieved on 01st April 2011M. S. Ramaiah School of Advanced Studies

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