M. S. Ramaiah School of Advanced Studies 1

Theory of Constraints

Module Leader :Asst Prof K.N.GanapathiAsst. Professor, MSRSAS, Bangalore

G.Prabu K.Sathish BabuBUB0910004 BUB0910006 M. Sc. (Engg.) in EMM

Production Planning and Control

M. S. Ramaiah School of Advanced Studies 2

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.

M. S. Ramaiah School of Advanced Studies 3

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

downstream

M. S. Ramaiah School of Advanced Studies 4

Theory of Constraints

Any system can produce only as much as its critically

constrained resource

M. S. Ramaiah School of Advanced Studies 5

DrumBufferRope

Five Focusing Steps

TOC Production Approaches

M. S. Ramaiah School of Advanced Studies 6

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 7

TOC 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.

TOC Illustration

M. S. Ramaiah School of Advanced Studies 8

The 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 can’t 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.

TOC Illustration

M. S. Ramaiah School of Advanced Studies 9

Constraints 1 and 3 don’t prevent the car from racing.

However, constraint 2 means the car can’t 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.

TOC Illustration

M. S. Ramaiah School of Advanced Studies 10

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 capacity

4 Steps to Managing TOC

M. S. Ramaiah School of Advanced Studies 11

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 12

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

M. S. Ramaiah School of Advanced Studies 13

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

TOC - Disadvantages

M. S. Ramaiah School of Advanced Studies 14

Conclusions

TOC 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.

M. S. Ramaiah School of Advanced Studies 15

1. Author unknown, Theory of Constraints , http://en.wikipedia.org/wiki/Theory_of_Constraints, retrieved on 29 th March 2011

2. Author unknown, Theory of Constraints, http://www.wepapers.com/Papers/113031/Theory_of_Constraints.ppt, retrieved on 29th March 2011

3. Author unknown., Theory of Constraints, www.linkedin.com/answers/business-operations/project-management/OPS_PRJ/680734-5146643,retrieved on 29th March 2011

4. Asst prof K.N.Ganapathi, Production Planning and Control , Course Notes, M.S. Ramaiah School of Advanced Studies, Bangalore, March 2010.

5. Author unknown., Theory of Constraints, http://www.12manage.com/methods_goldratt_theory_of_constraints.html , retrieved on 01st April 2011

References

M. S. Ramaiah School of Advanced Studies 16