Lecture 7 - The Goal & Constraint Management

Lecture 7 - The Goal & Constraint Management -...

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Lecture 7 - Outline 1 Lecture 7: “The Goal” & Constraint Management (Chapter 7) Objectives - Discussion of “The Goal” - Theory of constraints - Drum-buffer-rope - How to identify bottlenecks - The Theory of Constraints - Identification and Management of Bottlenecks - Managing Constraints in a Line Process - Line Balancing Theory of Constraints - TOC is a systematic management approach that focuses on actively managing those constraints that impede a firm’s progress toward its goal of maximizing profits and effectively using its resources - It outlines a deliberate process for identifying and overcoming constraints - TOC methods increase the firm’s profits by focusing on materials flow through the entire system
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Lecture 7 - Outline 2 z TOC involves the implementation of these five steps 1. Identify the System Bottleneck(s) 2. Exploit the Bottleneck(s) 3. Subordinate All Other Decisions to Step 2 4. Elevate the Bottleneck(s) 5. Do Not Let Inertia Set In z Bottlenecks can both be internal or external to the firm and are typically a process or step with the lowest capacity z Throughput time is the total elapsed time from the start to the finish of a job or a customer being processed at one or more workcenters z A bottleneck can be identified in several different ways z If it has the highest total time per unit processed z If it has the highest average utilization and total workload z If a reduction of processing time would reduce the average throughput time for the entire process Identifying the Bottlenecks Problem 1: Managers at the First Community Bank are attempting to shorten the times it takes customers for getting credit loan applications approved and completed. The flowchart for this process, consisting of several different activities, each performed by a different bank employee, is shown in figure 7.1 (replicated below). Approved loan applications first arrive at activity or step 1, where they are checked for completeness and put in order. At step 2, the loans are categorized into different classes according to the loan amount and whether they are being requested for personal or commercial reasons. While credit checking commences at step 3, loan application data are entered in parallel into the information system for record-keeping purposes at step 4. Finally, all paperwork for setting up the new loan is finished at step 5. The time taken in minutes is given in parenthesis. Assuming that no wait time occurs at any of the steps, which single step is the bottleneck? The management is also interested in knowing the maximum possible number of loan accounts that the bank can complete processing in a 5-hour day. Solution:
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Lecture 7 - Outline 3 z Services may not have simple line flows and demand may vary considerably z Bottlenecks can be identified by using average utilization z Variability creates floating bottlenecks z Variability increases complexity Problem 2: Diablo Electronics makes 4 unique products, (A,B,C, and D) that are fabricated and assembled in five different workstations (V, W, X, Y, and Z) using a small
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This note was uploaded on 02/14/2011 for the course MGSC 395 taught by Professor Zimmer during the Fall '10 term at South Carolina.

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Lecture 7 - The Goal & Constraint Management -...

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