AN OVERVIEW OF THEORY OF CONSTRAINTS TOC

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AN OVERVIEW OF THEORY OF CONSTRAINTS (TOC)

• Chwen Sheu, Ph.D.
• Certified TOC Instructor
• Kansas State University
• Jan/2003

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I. THE EVOLUTION OF TOC

• A. Creative Output Inc., 1976
• B. The Goal An On-Going Improvement Process,
  1984
• C. Avraham Y. Goldratt Institute (AGI), 1986
• D. Its Not Luck, 1994
• E. The Theory of Constraints and Its Implications
  for Management Accounting, 1995
• Critical Chain, 1997
• Necessary but Not Sufficient, 2000

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II. WHAT IS TOC?

• A. TOC is a management philosophy that emphasizes
  constraint identification and management as the
  keys for achieving an organizations goals.
• B. SYSTEMS, GOALS CONSTRAINTS
• The Goal of a company ?
• Productivity is nothing but

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II. WHAT IS TOC? (Contd)

• C. The Chain Analogy
• The strength of a chain is governed by its ...
• Local Global

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II. WHAT IS TOC? (Contd)

• D. Types of Constraints
• Physical constraints
• Nonphysical constraints

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III. TOC APPLICATIONS

• A. Production Scheduling
• B. Thinking Process (TP)
• C. TOC Performance Measurement
• D. Project Management the TOC Way
• E. Distribution

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III.A. PRODUCTION THE TOC WAY

• Hiking Analogy

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III.B. THINKING PROCESS

• A. A generic approach for continuous
  improvement
• What to Change?
• To What to Change to?
• How to Cause the Change?
• B. the biggest obstacle to successful
  implementation is to overcome resistance to
  change.

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4. Prerequisite tree What currently prevents the
implementation of the injection(s)?
1.Current Reality Tree Why is the system sick?
2. Evaporating Cloud What conflict is preventing
the cure
UDE
Injection
Injection
UDE
UDE
Obst.
Obst.
Obst.
injection
Clouds Objective
IO
IO
IO
UDE
Obst.
Obst.
opposite
Core Problem
IO
IO
IO
Obst.
DE
IO
DE
3. Future Reality Tree Will the injection lead
to all desired effects without creating new UDEs?
DE
Inj
5. Transition tree What actions does the
initiator have to take to effectively implement
the cure?
Objective
DE
IO
Inj
Initiators action
Injection
IO
Initiators action
Initiators action (which deals with Obstacle)
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III.C. TOC PERFORMANCE MEASUREMENT

• A. PQ Example
• B. Tell me how you measure me, and I will do as
  I am measured.
• C. Conventional cost accounting systems

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P Q EXAMPLE
100 unit/wk 90/unit
80unit/wk 100/unit
Mach A 10 min
Mach D 10 min
Mach C 10 min
Mach B 10 min
Mach C 5 min
Mach D 10 min
Mach B 10 min
Mach A 10 min
RM X 25
RM Y 20
RM Z 20
(1) One unit for each machine type 8 hrs/day 5
days/wk (2) Labor OH 6,000/wk.
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III.D. TOC PROJECT MANAGEMENT

• Single Project Management
• Multi-Project Management

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III.E. TOC PRODUCTION DISTRIBUTION

• Demand-Supply Management
• Drum-Buffer-Rope