Tata McGraw

Chapter 20
Constraint Management

Goldratts Rules

Goldratts Goal of the Firm

Performance Measurement

Capacity and Flow issues

Synchronous Manufacturing
OBJECTIVES
20-3
Goldratts Rules of Production Scheduling

Do not alance capacity alance

the flow

!he le"el utili#ation of a

nonottlenec$ resource is not
determined y its own potential ut
y some other constraint in the
system

%tili#ation and acti"ation of a

resource are not the same

&n hour lost at a ottlenec$ is an

hour lost for the entire system

&n hour sa"ed at a nonottlenec$

is a mirage
20-4
Goldratts Rules of Production Scheduling (Continued)

'ottlenec$s go"ern oth

throughput and in"entory in
the system

!ransfer atch may not and

many times should not e
e(ual to the process atch

& process atch should e

"ariale oth along its route
and in time

Priorities can e set only y

e)amining the systems
constraints and lead time is a
deri"ati"e of the schedule
20-5
Goldratts heor! of Constraints ("C)

*dentify the system constraints

Decide how to e)ploit the

system constraints

Suordinate e"erything else to

that decision

+le"ate the system constraints

*f, in the pre"ious steps, the

constraints ha"e een ro$en,
go ac$ to Step -, ut do not let
inertia ecome the system
constraint
20-#
Goldratts Goal of the $ir%
!he goal of a firm is to
ma$e money
20-&
Perfor%ance 'easure%ent(
$inancial

.et profit
)
an asolute measurement in
dollars

Return on in"estment
)
a relati"e measure ased on
in"estment

Cash flow
)
a sur"i"al measurement
20-*
Perfor%ance 'easure%ent(
"+erational

-/ !hroughput
)
the rate at which money is
generated y the system through
sales

2/ *n"entory
)
all the money that the system has
in"ested in purchasing things it
intends to sell

0/ 1perating e)penses
)
all the money that the system
spends to turn in"entory into
throughput
20-,
Producti-it!

Does not guarantee

profitaility
)
2as throughput increased3
)
2as in"entory decreased3
)
2a"e operational e)penses
decreased3
20-.0
/n0alanced Ca+acit!

*n earlier chapters, we discussed

alancing assemly lines
)
!he goal was a constant cycle time
across all stations

Synchronous manufacturing "iews

constant wor$station capacity as a
ad decision
20-..
he Statistics of 1e+endent 2-ents

Rather than alancing capacities, the flow of

product through the system should e alanced
Process i%e (')
Process i%e (&)
10
6 8 10 12 14
Process i%e (')
Process i%e (&)
10
6 8 10 12 14
(Constant)
(Constant) (Variable)
(Variable)
When
one
process
takes
longer
than the
average,
the time
can not
be made
up
20-.2
Ca+acit! Related er%inolog!

Capacity is the a"ailale time

for production

'ottlenec$ is what happens if

capacity is less than demand
placed on resource

.onottlenec$ is what happens

when capacity is greater than
demand placed on resource

Capacity4constrained resource
5CCR6 is a resource where the
capacity is close to demand
placed on the resource
20-.3
Ca+acit! 23a%+le Situation .
4 5 'ar6et
Case 7
!
Bottleneck Nonbottleneck
Demand/month 200 units 200 units
rocess time/unit 1 hour 4! mins
"#ail$ time/month 200 hours 200 hours
!here is some idle production in this set up/ 2ow
much3
!here is some idle production in this set up/ 2ow
much3
278 in 9
278 in 9
20-.4
Ca+acit! 23a%+le Situation 2
5 4 'ar6et
Case 8
!
Bottleneck Nonbottleneck
Demand/month 200 units 200 units
rocess time/unit 1 hour 4! mins
"#ail$ time/month 200 hours 200 hours
*s there is going to e a uild up of unnecessary production
in 93
*s there is going to e a uild up of unnecessary production
in 93
9es, 278 in 9
9es, 278 in 9
20-.5
Ca+acit! 23a%+le Situation 3
4 5
7sse%0l!
'ar6et
Case C
!
Bottleneck Nonbottleneck
Demand/month 200 units 200 units
rocess time/unit 1 hour 4! mins
"#ail$ time/month 200 hours 200 hours
*s there going
to e a uild up
in unnecessary
production in
93
*s there going
to e a uild up
in unnecessary
production in
93
9es, 278 in 9
9es, 278 in 9
20-.#
Ca+acit! 23a%+le Situation 4
4 5
'ar6et 'ar6et
Case 1
!
Bottleneck Nonbottleneck
Demand/month 200 units 200 units
rocess time/unit 1 hour 4! mins
"#ail$ time/month 200 hours 200 hours
*f we run oth :
and 9 for the
same time, will
we produce any
unneeded
production3
*f we run oth :
and 9 for the
same time, will
we produce any
unneeded
production3
9es, 278 in 9
9es, 278 in 9
20-.&
i%e Co%+onents of Production C!cle

Setup time is the time that a part

spends waiting for a resource to
e set up to wor$ on this same
part

Process time is the time that the

part is eing processed

;ueue time is the time that a

part waits for a resource while
the resource is usy with
something else
20-.*
i%e Co%+onents of Production C!cle (Continued)

<ait time is the time that a part

waits not for a resource ut for
another part so that they can e
assemled together

*dle time is the unused time that

represents the cycle time less the
sum of the setup time, processing
time, (ueue time, and wait time
20-.,
Sa-ing i%e
8ottlenec6 9on0ottlenec6
<hat are the conse(uences of sa"ing time at each
process3
<hat are the conse(uences of sa"ing time at each
process3

Rule= 'ottlenec$s go"ern oth

throughput and in"entory in the system/

Rule= &n hour lost at a ottlenec$ is an

hour lost for the entire system/

Rule= &n hour sa"ed at a nonottlenec$

is a mirage/

Rule= 'ottlenec$s go"ern oth

throughput and in"entory in the system/

Rule= &n hour lost at a ottlenec$ is an

hour lost for the entire system/

Rule= &n hour sa"ed at a nonottlenec$

is a mirage/
20-20
1ru%: 8uffer: Ro+e
7 8 C 1 2 $
'ottlenec$ 5Drum6
*n"entory
uffer
5time uffer6
Communication
5rope6
Mar$et
20-2.
;ualit! <%+lications

More tolerant than >*! systems

)
+)cess capacity throughout system

+)cept for the ottlenec$

)
;uality control needed efore
ottlenec$
20-22
8atch Si=es

<hat is the atch si#e3

1ne3

*nfinity3
20-23
8ottlenec6s and CCRs( $lo>-Control Situations

& ottlenec$
)
5-6 with no setup re(uired when
changing from one product to another
)
526 with setup times re(uired to
change from one product to another

& capacity constrained resource

5CCR6
)
506 with no setup re(uired to change
from one product to another
)
5?6 with setup time re(uired when
changing from one product to another
20-24
<n-entor! Cost 'easure%ent(
1ollar 1a!s

Dollar Days is a measurement of

the "alue of in"entory and the time
it stays within an area
de+art%ent a >ithin da!s of 9u%0er
in-entor! of ?alue
1a!s 1ollar =
20-25
8enefits fro% 1ollar 1a! 'easure%ent

Mar$eting
)
Discourages holding large
amounts of finished goods
in"entory

Purchasing
)
Discourages placing large
purchase orders that on the
surface appear to ta$e ad"antage
of (uantity discounts

Manufacturing
)
Discourage large wor$ in process
and producing earlier than
needed
20-2#
Relationshi+ >ith "ther $unctional 7reas

&ccountings influence

Mar$eting and production

20-2&
;uestion 8o>l
<hich of the following are e)amples
of Goldratts Rules of Production
Scheduling3
a/ 'alance flow, not capacity
/ %tili#ation and acti"ation are the
same
c/ .onottlenec$s go"ern
throughput
d/ &ll of the ao"e
e/ .one of the ao"e
"ns#er$ a% Balance &lo#, not capacit'
(There are eight other rules%)
20-2*
;uestion 8o>l
<hich of the following are e)amples of
Goldratts !heory of Constraints3
a/ *dentify the system constraints
/ Decide how to e)ploit the system
constraints
c/ +le"ate the system constraints
d/ &ll of the ao"e
e/ .one of the ao"e
"ns#er$ d% "ll o& the above
20-2,
;uestion 8o>l
<hich of the following is
Goldratts @Goal of the FirmA3
a/ Reduce costs
/ *ncrease Bos
c/ *ncrease mar$et share
d/ &ll of the ao"e
e/ .one of the ao"e
"ns#er$ e% *one o& the above (The +oal
o& the ,irm is to -make mone'.%)
20-30
;uestion 8o>l
<hich of the following are Goldratts
Financial Measurements used to
measure a firms aility to ma$e
money3
a/ .et profit
/ Return on in"estment
c/ Cash flow
d/ &ll of the ao"e
e/ .one of the ao"e
"ns#er$ d% "ll o& the above
20-3.
;uestion 8o>l
<hich of the following are
Goldratts 1perational
Measurements used to
measure a firms aility to
ma$e money3
a/ !hroughput
/ *n"entory
c/ 1perating e)penses
d/ &ll of the ao"e
e/ .one of the ao"e
"ns#er$ d% "ll o& the above
20-32
;uestion 8o>l
&ccording to Goldratt, any resource whose
capacity is less than the demand placed
on it, is considered which of the
following3
a/ .onottlenec$ resource
/ 'ottlenec$ resource
c/ Capacity4constrained resource
d/ & uffer resource
e/ .one of the ao"e
"ns#er$ b% Bottleneck resource
20-33
;uestion 8o>l
<hich of the following $inds of
time ma$e up a @cycle timeA3
a/ Setup
/ Processing
c/ ;ueue
d/ <ait
e/ &ll of the ao"e
"ns#er$ e% "ll o& the above (The correct
ans#er can also include Idle Time%)
20-34
;uestion 8o>l
<hen comparing >*! to synchronous
manufacturing, synchronous
manufacturing has which of the
following drawac$s3
a/ Cimited to repetiti"e manufacturing
/ Re(uires stale production le"el
c/ Does not allow much fle)iility in the
products produced
d/ &ll of the ao"e
e/ .one of the ao"e
"ns#er$ e% *one o& the above (These are
dra#backs o& JIT, not s'nchronous
manu&acturing%)
20-35
1-36
+nd of Chapter 20
20-3#