Production Planning and Control

Theory of Constraints

G.Prabu K.Sathish Babu

BUB0910004 BUB0910006

M. Sc. (Engg.) in EMM

Module Leader :
Asst Prof K.N.Ganapathi
Asst. Professor, MSRSAS, Bangalore
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 Theory of Constraints
Aim :
To get an idea of the term “Theory of constraints” which
commonly used in Manufacturing industries now a days

Objectives :
• Introduction to the topic “Theory of constraints”.

• Analysis of the topic with a relevant data.

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 TOC Introduction
 Theory of constraints is an overall management philosophy
developed by the Eli-Gold ratt in his book titled “The goal”
it is geared to help organizations to achieve their goal
Continuously
 This is also called Optimized Production Technology, which
revolves around the concept of bottlenecks
 Bottleneck is a resource whose cap greater than demand
downstream
 Non-bottleneck is a resource whose cap less than demand
downstream
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 Theory of Constraints

Any system can produce only as much as its critically

constrained resource

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 TOC Production Approaches

Five
Focusing
Steps

Drum
Buffer
Rope

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 Theory of Constraints
Five Focusing Steps
 Identify the bottleneck or constraint
 Exploit the bottle neck
 Subordinate everything else to the bottle neck
 Elevate the bottle neck
 Evaluate whether solving the current bottle neck
Drum-Buffer-Rope – 3 elements of the solution
 The drum or constraint or weakest link, the buffer or material
release duration, and the rope or release timing.  
 To protect the weakest link in the whole system, by
eliminating by process dependency and variations.
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 TOC Illustration

TOC is about identifying the most significant constraint

in a system and removing this constraint.
A constraint in terms of TOC is a bottleneck. Think of
TOC in terms of a car which is going to be used for a race.
We buy a regular road car and want to get it on the track to
race.
The objective of the race is to complete 20 laps of the track in
as short a time as possible.

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 TOC Illustration
The constraints are listed:
Constraint 1. The car is reliable and works fine. However, engine
parts are expensive when required.
Constraint 2. The car needs to be registered to race. Without
registration, it can’t even go on the track.
Constraint 3. The car needs to be repainted. The sponsors require
red paint within a year or they will withdraw
the sponsorship.

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 TOC Illustration
 Constraints 1 and 3 don’t prevent the car from racing.
 However, constraint 2 means the car can’t race at all.
 According to TOC, the ‘most severe’ constraint should be
eliminated
 Therefore, address Constraint 2 first (i.e. get the car registered)
Once, Constraint 2 has been eliminated, there will be a new
‘most severe’ constraint.
 Repeat the process of identifying & eliminating the constraint
 Every time we eliminate the most severe constraint we improve
the quality and performance of the system.

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 4 Steps to Managing TOC
Recognize the bottleneck operation and determine the
throughput contribution in the whole system.

Find the bottleneck operation by identifying operations with

large quantities of inventory operations.

Keep the bottleneck busy and subordinate all non -

bottleneck operations to the bottleneck operations.

Take actions to increase bottleneck efficiency and capacity

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 TOC 7 key Principles
 Balance /optimise the FLOW, not maximise capacity.
 Utilisation & activation of a resource are not synonymous.
 Bottlenecks govern both throughput & inventories.
 The size of transfer batch need not be equal to process batch.
 An hour lost at the bottleneck is an hour lost for the entire
system.
 The bottleneck & Processes lying downstream are forward
scheduled, from the present to finite cap.
 Lot sizes should be varied depending on components so as to
achieve a smooth and timely flow of material to customer.
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 TOC - Advantages
 Improves capacity decisions in the short-run
 Aids in process understanding
 Avoids local optimization
 Improves communication between departments
 Reduction in inventory
 More productive machine and more flexible
 Ability to meet shorter lead time
 Better customer service and relationship

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 TOC - Disadvantages
 Negative impact on non-constrained areas

 Ignores long-run considerations

 May lead organization away from strategy

 Not a substitute for other accounting methods

 Temptation to reduce the capacity

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 Conclusions

TOC was originally designed for improving manufacturing

processes. However, it has been adapted and successfully used
in many industries including; Marketing, Service Industries and
Information Technology.

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 References
1. Author unknown, Theory of Constraints ,
http://en.wikipedia.org/wiki/Theory_of_Constraints, retrieved on 29 th
March 2011

2. Author unknown, Theory of Constraints,

http://www.wepapers.com/Papers/113031/Theory_of_Constraints.ppt,
retrieved on 29th March 2011

3. Author unknown., Theory of Constraints,

www.linkedin.com/answers/business-operations/project-
management/OPS_PRJ/680734-5146643,retrieved on 29th March 2011

4. Asst prof K.N.Ganapathi, Production Planning and Control , Course

Notes, M.S. Ramaiah School of Advanced Studies, Bangalore, March
2010.

5. Author unknown., Theory of Constraints,

http://www.12manage.com/methods_goldratt_theory_of_constraints.ht
ml , retrieved on 01st April 2011
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