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Theory of Constraints

The Theory of Constraints (TOC) focuses on identifying bottlenecks in a process that limit overall throughput. It assumes constraints cannot be changed in the short run, so the goal is to maximize profits by exploiting existing constraints. The key steps are to identify internal or external constraints, decide how to operate the constraint at full capacity with the most profitable product mix, and determine how to alleviate future constraints by increasing capacity. The main advantage of TOC is that it helps improve short-run capacity decisions.

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harishsinghthakur
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30 views

Theory of Constraints

The Theory of Constraints (TOC) focuses on identifying bottlenecks in a process that limit overall throughput. It assumes constraints cannot be changed in the short run, so the goal is to maximize profits by exploiting existing constraints. The key steps are to identify internal or external constraints, decide how to operate the constraint at full capacity with the most profitable product mix, and determine how to alleviate future constraints by increasing capacity. The main advantage of TOC is that it helps improve short-run capacity decisions.

Uploaded by

harishsinghthakur
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Theory of Constraints

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Theory of Constraints

 Significance of bottlenecks
 Maximum speed of the process is the speed of
the slowest operation
 Any improvements will be wasted unless the
bottleneck is relieved
 Bottlenecks must be identified and improved if the
process is to be improved

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Theory of Constraints
 Purpose is to identify bottlenecks
Identification of constraints allows
management to take action to alleviate the
constraint in the future

3
Theory of Constraints

 Assumes current constraints cannot be


changed in the short-run
 What should be produced now, with current
resources, to maximize profits?

4
Theory of Constraints

 Does indicate how to use available resources


most effectively

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Theory of Constraints
 Constraint must be kept operating at its full
capacity
 If not, the entire process slows further

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Steps in the TOC Process

 Identify the system constraints


 Internal  External
 Process constraints  Material constraints
 Machine time, etc.  Insufficient materials
 Policy constraints  Market constraints
 No overtime, etc.  Insufficient demand

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Steps in the TOC Process

 Decide how to exploit the constraint


 Produce the most profitable product mix
 Want it working at 100%

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Step in the TOC Process

 Alleviate the constraint


 Determine how to increase its capacity

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Evaluation of TOC

 Advantage
 Improves capacity decisions in the short-run

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