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Theory

ofConstraints

Presented by:

Upma Joshi

Mohd.Arish

BabluRajib Lochan

Sonalika

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Theory of constraints

} Theory of Constraints (TOC) is an overall

management philosophy introduced by Dr. Eliyahu M.

Goldratt in his 1984 book titled The Goal, that is

geared to help organizations continually achieve their

goal.

} The title helps in achieving more of its goal by a very

small number of constraints, and that there is always at

least one constraints.

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Assumptions ofToc

o The underlying assumption of Theory of Constraints isthat organizations can be measured and controlled by

variations on three measures:

Throughput Operating expense

inventory

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Steps of theory of constraints

} The TOC process seeks to identify the constraint and

restructure the rest of the organization around it,through the use of the Five Focusing Steps:

Identify the constraints

Decide how to exploit the constraints Subordinate all other processes to above decision

Elevate the constraints

Results

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Constraints

} A constraint is anything that prevents the system from

achieving more of its goal. There are many ways that

constraints can show up, but a core principle within

TOC is that there are not tens or hundreds of

constraints. There is at least one and at most a few in

any given system. Constraints can be internal or

external to the system.

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Types of internal

constraints

} There are three types of internal constraints, these are:

equipment

People

policy

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Buffers

} Buffers are used throughout Theory of Constraints.

They appear as part of the EXPLOIT andSUBORDINATE steps of the five focusing steps.

Buffers are placed before the key constraint, thus

ensuring that the constraint is never starved. Buffers

used in this way protect the constraint and should allow

for normal variation of processing time and the

occasional upset before the constraint.

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PLANTTYPES

There are four primary types of plants in the TOC :

I-plant

A-plant

V-plant

T-plant

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Applications ofTheory of Constraints

There are various applications of toc:

Operations

Supply chain logistic

Finance and accounting

Project management

Marketing and sales

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The Toc Thinking Process

} The Thinking Processes are a set of tools to help managers

walk through the steps of initiating and implementing a

project:

1. Gain agreement on the problem

2. Gain agreement on the direction for a solution

3. Gain agreement that the solution solves the problem

4. Agree to overcome any potential negative ramifications

5. Agree to overcome may obstacles to implementation

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Real business exampleThe Constraint is the key:

The Lessons plant ofBaxterInternational makes medical products such

as sterile bags. Management of the plant is actually aware of the

necessity to actively manage its constraints. For example, when

materials are a constraint, management may go to a secondary vendor

and purchase material at a higher cost than normal. When a machine isthe constraint, a weekend shift is often added on the machine. If a

particular machine is chronically the constraint and management has

exhausted the possibilities of using it more effectively, then additional

capacity is purchased. For example when the constraint was the plastic

extruding machines, a new extruding machine was ordered. However

even before the machine arrived, management had determined that theconstraint would shift to the blenders once the new extruding capacity

was added. Therefore a new blender was already planned. By thinking

ahead and focusing on the constraints, management is able to increase

the plant's real capacity at the lowest possible cost.

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Conclusion

} What is the Theory of Constraints and How Should it beImplemented?","Beyond The Goal". That is

acknowledges the sources of information and

inspiration for the Thinking Processes and Critical

Chain methodologies. Theory of Constraints referenced

foundational materials. "Standing on the Shoulders of

Giants" .