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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" .