Week 5: Theory of Constraints

Question 1

What is a constraint?

Answer 1

the longest PT or build of of WIP

Question 2

What is a bottleneck?

Answer 2

defines capacity, a resource that limits the capacity or maximum output of the process OR if capacity is less than demand, a constraint is considered a bottleneck (higher utilization rates)

Question 3

What role does TOC play in Operational Excellence?

Answer 3

identifies bottleneck and constraints to get maximum efficiency
- manages constraints, TOC, and system constraints

Question 4

Eli Goldratt’s Theory of Constraints

Answer 4

• the single slowest step determines capacity for the entire system
• TOC predicts that overall process capacity is governed by constraints in the system
• Steps: Identify, Exploit, Subordinate, Elevate, Repeat

Question 5

The Goal of the Firm

Answer 5

to make money

Question 6

Performance Measurements

Answer 6

measuring how well the business is performing

Question 7

Unbalanced Capacity

Answer 7

idea that not all capacities of each station can be the same since their outputs are not the same

Question 8

Synchronous manufacturing

Answer 8

a production process coordinated to work in harmony to achieve the goals of the firm, uses forward scheduling because it focuses on the critical resources (scheduled forward in time to ensure loads placed on them are within capacity)

Question 9

Throughput (time)

Answer 9

the amount of time it takes a customer to complete all steps in a service process

Question 10

Inventory

Answer 10

all the money that the system has invested in purchasing things it intends to sell

Question 11

Operating expenses

Answer 11

all the money that the system spends to turn inventory into throughput

Question 12

Productivity

Answer 12

a measure of how well resources are used, according to Goldratt’s definition, all the actions that bring a company closer to its goals

Question 13

Basic Manufacturing Building Blocks

Answer 13

materials, processes, systems

Question 14

Bottleneck

Answer 14

a resource that limits the capacity or maximum output of the process

Question 15

Optimal Product Mix

Answer 15

identify the bottleneck by calculating the load on each step in the process and exploit the bottleneck by maximizing CM (or gross profit) per minute at the bottleneck

Question 16

Process Capacity

Answer 16

indicated by the rate of output for a process or system dictated by the bottleneck (units/dollars per period of time)

Question 17

Applying TOC to product mix decisions

Answer 17

• Traditional method (ranked on CM)
• Bottleneck method (ranked on CM/Time of Bottleneck) *always has higher profit than traditional