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Week 9 TOC 2011 student - Week 9 Managing Time The Theory...

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Week 9: Managing Time: The Theory of Constraints Nicole Ang Quad 3097
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Objectives 1. Understand concept of “time-based management” 2. Understand the Theory of Constraints (TOC) & how it differs from conventional approaches 3. Appreciate technical design aspects of TOC 4. Appreciate how constraining resources and process variability might be managed 5. Be aware of potential issues with TOC
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Reading BDMM Chapter 5 Theory of Constraints Available on Blackboard Mowen et. al pp.741-2 & 755-61. For interested people “A Little TOC Goes a Long Way” Smith, F. MSI August 2003. Instructions on how to access this article are given along with the tutorial questions
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Lecture Outline 1. Introduction 2. What is a constraint? 3. Theory of constraints 3.1 Measurement 3.2 Managing constraining resources 3.3 Examples
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1. Introduction to time-based management This subject focuses on value creation Using processes to create value Processes are supported by resources How do we create value by managing a constraining resource? In particular... How do we manage constraining resources in order to generate revenue at an increased rate E.g., $ per machine hour
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6 Time-based management LO1 Compress time to undertake processes to enhance customer value & reduce costs Develop new products/services Fill customer orders for products/services Why important? Dictates rate at which products are produced & revenue generated Determines time resources are tied up in processes Delays lead to inventory build-up New products/services
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7 Developing new products & services Measures to assess product development process Time-to-market Break-even time How to reduce time taken Involve suppliers Efficient design process Using teams & decentralisation
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8 Time taken to fill customer orders Order placed Order delivered Order received Order setup Order produced
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2. What is a constraint? Anything that stops you from getting more of what you want External or Internal Tangible or Intangible
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10 External constraints Market constraints Supply constraints
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11 Internal constraints Materials processes are starved of materials Capacity different machine capacities Logistical Planning and control issues, e.g. variability Managerial Strategies and policies Behavioural
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Examples for an airline? Constraint External Internal Tangible Intangible
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Binding constraint The most “harmful” constraint Weakest link in organisation’s value chain May also be referred to as a bottleneck
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Binding constraint 10 km/hr
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3. Theory of Constraints LO2 Goal oriented: The “global goal”
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