Class 25 - AGENDA THEORY OF CONSTRAINTS JIT/LEAN Management...

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AGENDA THEORY OF CONSTRAINTS JIT/LEAN
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Management as Science Application of scientific method Theory Hypotheses Data Verification
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Five Principles of TOC 1. Every system has a bottleneck or constraint. 2. There is variance in every system. 3. Every organization must be managed as a system. 4. Performance measures are crucial to the organization’s success. 5. Every system must continually improve.
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The Customer WC1 WC2 WC3 WC5 WC6 WC4 WC7 195/day 300/day 180/day 300/day 300/day 200/day 250/day Demand: 200/day Exhibit 1. Every System Has a Bottleneck
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Principle 2: There is Variance in every system A B C D E F G MARKET H Time Time If A ends here, then B’s distribution shifts to the right
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Principle 3: Every organization must be managed as a system A B C D E F G MARKET Product flows through Work Centers A through H. The product must flow in strict sequence (i.e., B cannot be done before A). H “One phenomenon is called ‘dependent events.’ Do you know what I mean by that term? I mean that an event, or a series of effects, must take place before another can begin … the subsequent event depends upon the ones prior to it. You follow?” (Goldratt, The Goal , 1992, p. 86) Dependent Events
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A B C Work station A has a high variance in processing times B’s processing distribution B’s distribution of completed jobs skewed to right. C’s processing distribution C’s distribution of completed jobs skewed to right Output distribution when work station is isolated Dependent Events Transmit Variance
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Principle 4: Performance Measures are crucial to Organizational Success Global Operational Measures (T, I, OE) Throughput (T) The rate at which the system generates money through sales Sales Price - Cost of Materials Inventory (I) All the money the system invests in purchasing things the system intends to sell Operating Expense (OE) All the money the system spends in turning inventory
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Principle 5: Every system must continuously improve Generic Solutions Drum-Buffer-Rope 5 Focusing Steps Breakthrough Solutions 3 Questions What to change What to change to How to change Thinking Process Logic Trees
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The Theory of Constraints: Five Focusing Steps Step 1: Identify the system’s constraint(s). Step 2: Decide how to exploit the system’s constraint(s). Step 3: Subordinate everything else to the decisions made in Step 2. Step 4. Elevate the system’s constraint(s). Step 5: If a constraint is broke in Step 4, go back to Step 1. But don’t allow inertia to become the system’s primary constraint.
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A Troop Analogy Since the weakest soldier dictates pace To prevent spreading, tie weakest soldier to the front row To protect overall pace, provide some slack in the rope
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Synchronized Manufacturing The Drum-Buffer-Rope Way Raw Materials Finished Goods A rope tying the gating operation to the buffer Time Buffer Major Capacity Constraint
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This note was uploaded on 10/30/2011 for the course BUS 451 taught by Professor Bilbrey during the Spring '11 term at Anderson University SC.

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Class 25 - AGENDA THEORY OF CONSTRAINTS JIT/LEAN Management...

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