Sec 10 - Theory of Constraints

Question 1

Name 2 types of constraints according to the TOC

Answer 1

1) Throughput-based constrains

2) Behavior-based constraints

Question 2

What are Throughput-based constraints?

Answer 2

Internal physical resource constraints – machine capacity, skill set, supplier, etc

External Market constraint – when company can produce more than the market demands

Question 3

What are Behavior-based constraints?

Answer 3

People-based

Lack of understanding of causes and effects
Not knowing where to start making improvements

Question 4

What are the Five Focusing Steps used for?

Answer 4

to address throughput-based constraints

Question 5

What is VATI analysis?

Answer 5

a procedure for determining the general flow of parts and products from raw materials to finished products

Question 6

What is V type in VATI?

Answer 6

basic raw materials transformed into a range of products

i.e. saw mill

Question 7

What is A type in VATI?

Answer 7

Multiple raw materials end up in component parts and subassemblies and then into a final product

Question 8

What is T type in VATI?

Answer 8

A limited number of basic units that are then configured during final assembly stage into many different end products

i.e. consumer electronics

Question 9

What is I type in VATI?

Answer 9

Most basic flow. Product flow through work centers that perform the same operations to produce multiple products.

i.e. frozen baked goods – weigh, mix, bake, freeze, package

Question 10

What are the Five Focusing Steps of TOC

Answer 10

1) Identify the constraint
2) Exploit the constraint – use the constraint to its maximum capability
3) Subordinate everything to the constraint
4) Elevate the constraint
5) Start over

Question 11

define Drum

define Rope

Answer 11

drum– The speed of the constraint machine

rope – the communication between the constraint machine and the upstream machines. Ensures upstream delivers material to the constraint just in time.

Question 12

define Throughput Accounting

Answer 12

set of management accounting tools used to facilitate decisions on elevating the constraint — add more machines? hire more workers? increase worker overtime?

Involves –
Throughput (T)
Investment (I) includes inventory
Operating Expense (OE)

Question 13

Define and calculate Throughput

Answer 13

Rate at which an organization generates monetary value via the sales of a product or service

= sales revenue - true variable costs

Question 14

TOC approach to distribution

Answer 14

Law of statistics

Pooling inventory at a central location will result in lower total inventory levels than if inventory is held at multiple distribution centers