Theory of Constraints

Eliyahu Goldratt
• Philosophy : The Goal.
• Management concept : Theory of
Constraints. (TOC).
• Technical Component : Optimized
Production Technology (OPT).
The Goal : เป้าหมายขององค์กร

Make money in the present as

well as in the future.
 Measuring the goal
• Net profit
• Cash
• Return on Investment (ROI)
For a manufacturing enterprise, the goal can
also be measured by
• Throughput
• Inventory
• Operating expenses
 Definitions
• Throughput: The rate at which the system
generates money through sales.
– Note that the money is generated through
sales and not production because if you
produce something and don’t sell it, you have
not really had throughput. (You’ve just put it
into inventory).
– Unsold Product is not throughput.
 Definitions
• Inventory : money that system has
invested in purchasing thing it intends to
sell, it measures inventory in term of
material cost only .
• Operational Expense: All the money the
system spends in order to turn inventory
into throughput.
 to accomplish the Goal,
the company must simultaneously

• Increase throughput.
• Reduce inventory.
• Cut operating expenses.
 ข้อจำากัด (Constraint)
• Anything that limits a system from
achieving higher performance in attaining
its goal.
• Two types of constraints
– Bottleneck
– Capacity constrained resource
 Constraint
• Bottleneck
– The resource’ s capacity is less than or equal
to the market demand
• Capacity constrained resource
– Resource that has become a bottleneck as a
result of inefficient utilization
• For simplicity, we will only use the term
bottleneck
 Constraint

Customer
Cutting Machining
Demand
1,300/day 800/day
850/day
Assembly
1:1
1,100/day
Pressing Welding
1,000/day 900/day
 OPT Rules
• Balance flow , not capacity.
• Constraints determine nonbottleneck
utilization.
• Utilization and activation of a resource are
not synonymous.
• An hour lost at a bottleneck is an hour lost
for the total system.
• An hour saved at a nonbottleneck is a
mirage.
 OPT Rules
• Bottleneck govern both throughput and
inventory in the system.
• The transfer batch may not, and many
times should not, be equal to the process
batch.
• The process batch should be variable, not
fixed.
• Schedules should be established by
looking at all of the constraints. Lead time
are the result of a schedule and cannot be
predetermined.
 Example

A Two Product
Assembly
2 min/unit Demand
A : 300/day
C(2) D(2) B : 50/day
Drill Lathe
4 min/unit 3 min/unit Production
2 Drills m/c
1 Lathe m/c
B 1 Milling m/c
Assembly
4 min/unit
three shift per day
D(1) E(2) (1440 minutes)
Lathe 3 min/unit Mill
10 min/unit
 Machine Load 2*1*300
Units
Unit
required Total Processing
Processing
per Time Avail Utiliz
Time
assembly
able ation
A B A B A B Total

Assembly 2 4 1 1 600 200 800 1440 55.7%

Drill 4 0 2 0 2400 0 2400 2880 88.3%

Lathe 3 3 2 1 1800 150 1950 1440 135.4%

10*2*50
Mill 0 10 0 2 0 1000 1000 1440 69.4%
 Example
• The Lathe is the bottleneck resource.
• Daily demand cannot met.
• Lathe utilization will be 100%.
• Utilization of the other machines will
decrease. (activation of the resources can
be at different utilization levels.
• Operate the nonbottleneck operations
more efficiently will not contribute anything
to throughput.
 The transfer batch / the process batch.

Operation 3
Transfer 10
Process

Operation 2
Transfer 10 Process batch = 10
Transfer Batch = 10
Operation 1
10 20 30
time
 The transfer batch / the process batch.

Operation 3
Transfer 5
Process

Operation 2
Transfer 5 Process batch = 10
Transfer Batch = 5
Operation 1
10 20 30
Process Batch/Transfer Batch

Transfer Batch = 50
ส่งครั้งละ 50
Process 1 50 Process 2

ผลิตครัง้ ละ 200
Process batch =200
 Theory of Constraints (TOC)
• System’s output are determined by its
constraints.
• Broad categories of constraints
– Internal Resource Constraint : machine ,worker
,tool.
– Market Constraint :The market demand is less
than production capacity
– Policy constraint: A policy dictate the rule of
production
 Performance Measure
• TOC focuses on the role constraints play in
systems in order to improve system
performance toward the GOAL.
• Two type of performance measures
– Financial Measures : net profit , ROI , cash flow
– Operational Measures
• Throughput
• Inventory
• Operating Expenses
• Efficiency measure,such as resource
utilization,are not part of the operational
measures.
 Five step of TOC
• Identify the Constraint (The Drum).
• Exploit the Constraint (Buffer the Drum)
• Subordinate Everything Else (Rope)
• Elevate the Constraint
• If the Constraint Moves, Start Over
 DBR Technique
• Drum-Buffer-Rope (DBR) is a production control
technique to implement the step of TOC.
• Drum
– Bottleneck, beating to set the pace of production for
the rest of the system
• Buffer
– Inventory, placed in front of the bottleneck to ensure it
is always kept busy
– Determines output or throughput of the system
• Rope
– Communication signal, tells processes upstream
when they should begin production
 DBR Technique
Raw material
dispatching point

Drum
Raw
Material 1 2 … m … n Customer

Rope Buffer
 Buffer
• มีไว้เพื่อรองรับความไม่แน่นอนของกระบวนการต้นนำ้าที่ทำาหน้าที่สง่ ชิน้
ส่วนให้กับ Bottleneck
• ขนาดของ Buffer คิดจากเวลามาตรฐานที่ Bottleneck
จะใช้ชิ้นส่วนใน Buffer จนหมด
• แนะนำาให้ขนาด Buffer เป็น หนึ่งในสีข่ อง Lead Time
ของระบบ
• เช่น ถ้าชิน้ ส่วนเดินทางจากต้นทางถึงจบกระบวนการเป็นสินค้าใช้เวลา
8 ชั่วโมง ขนาดของ Buffer คือ 2 ชัว่ โมง
 ตัวอย่าง
มี 4 Work Center
แต่ละ WC มีกำาลังผลิต สินค้า P สินค้า Q
2400 นาทีตอ่ สัปดาห์ อุปสงค์ 100/สัปดาห์ อุปสงค์ 50/สัปดาห์
ราคา 90 ราคา 100

Purchased Part D D
5/pcs 10 นาที 5 นาที
C C B
10 นาที 5 นาที 15 นาที
A B A
15 นาที 15 นาที 10 นาที
RM 1 RM 2 RM 3
20/pcs 20/pcs 20/pcs
 ใช้ตัวแบบ LP หา Bottleneck
• สินค้า P ราคา 90 บาท หักวัตถุดิบและชิ้นส่วนออก 45 บาท
เหลือรายได้ = 45 บาท
• สินค้า Q ราคา 100 บาท หักวัตถุดิบและชิ้นส่วนออก 40 บาท
เหลือรายได้ = 60 บาท
• นัน้ คือ Objective Function Z = 45P+60Q
 ข้อจำากัด
• 15P+10Q <= 2400 Work Center A
• 15P+30Q <= 2400 Work Center B
• 15P+5Q <= 2400 Work Center C
• 10P+5Q <= 2400 Work Center D
• P <= 100 Demand P
• Q <= 50 Demand Q
 Linear Programming Model
• Max Z = 45P+60Q
Subject to
• 15P+10Q <= 2400 Work Center A
• 15P+30Q <= 2400 Work Center B
• 15P+5Q <= 2400 Work Center C
• 10P+5Q <= 2400 Work Center D
• P <= 100 Demand P นำาไปหาคำาตอบจะได้
• Q <= 50 Demand Q Slack ของข้อจำากัด
WC B=0 แสดงว่า WC B
P,Q >= 0
เป็น Bottleneck
Resource min/Week min/week Process Available Percentage
P Q Load per time per Load per
Week week week

A 1500 500 2000 2400 83

B 1500 1500 3000 2400 125

C 1500 250 1750 2400 73

D 1000 250 1250 2400 52

 Purchased Part
D
5/pcs

A Buffer B Drum

RM 3 RM 1 RM 2
Buffer