Term
| Theory of Constraints (TOC) |
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Definition
| a systematic management approach that focuses on actively managing those constraints that impede a firms progress towards its goal of maximizing profits and effectively using its resources (developed by Eli Goldratt) |
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Term
| How does TOC increase profits? |
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Definition
| by making materials move more seamlessly through the system |
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Term
| Why do investments count as inventory? |
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Definition
| all investments in a system count as inventory because they can be sold for profit |
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Term
| What maximizes throughput? |
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Definition
| Maximizing the bottleneck |
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Term
| Seven key principles of the theory of constraints |
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Definition
o The focus should be on balancing flow, not capacity
o Maximizing the output and efficiency of each resource might not maximize throughput
o An hour lost at the bottleneck is an hour lost for the whole system. In addition, an hour saved at a non-bottleneck is not an hour gained
o Inventory is needed only at the front of a bottleneck in order to prevent them from sitting idle, and in front of assembly and shipping processes to protect customer delivery schedules. Inventory elsewhere should be avoided
o Work should only be released into the system at a rate the bottle neck can manage. Bottleneck flows should be equal to market demand. This lowers inventory and operating expenses.
o Activating a non-bottleneck source is not the same as utilizing the bottleneck
o Every capital investment must be considered as to its impact on throughput, inventory, and operating expense |
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Term
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Definition
o Identify the bottleneck
o Exploit the bottleneck
o subordinate all decisions to exploiting the bottleneck
o evaluate the bottlenecks
o do not let inertia set in |
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Term
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Definition
| the total time elapsed from the start of a job or customer being processed at one or more workstations |
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Term
| Qualifications of a bottleneck |
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Definition
| 1) it has the highest total time per unit processed or 2) has the highest utilization and total workload |
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Term
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Definition
| the idea that bottlenecks are not set in stone and can change |
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Term
| What does setup time affect? |
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Definition
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Term
| the key to managing bottlenecks |
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Definition
| monitoring short term schedules and keep the bottleneck resource busy |
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Term
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Definition
| how much a product contributes to the profits and overhead |
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Term
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Definition
| the idea that the contribution to profits and overhead stems from the bottleneck, not the individual product |
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Term
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Definition
| is the method used to control and schedule production by regulating the flow of WIP materials at the bottleneck |
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Term
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Definition
| the assignment of work to a station in a line process |
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Term
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Definition
| the smallest unit of work that can be performed independently |
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Term
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Definition
work that must be completed before the next element can begin
• The goal of line balancing is to match the output rate to the staffing or production plan |
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Term
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Definition
| the maximum time allowed for work on a unit at a station (c= 1/r) |
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Term
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Definition
| a benchmark or goal for the minimum number of work stations possible (tm= sum(t)/c) |
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Term
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Definition
| the amount efficiency falls below 100% |
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Term
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Definition
| pacing, behavioral factors, number of models produced, and different cycle times |
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Term
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Definition
| the movement of product from one station to another as cycle time has elapsed |
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Term
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Definition
| a production line that produced many items related to the same family (allows for high volume and product variability) |
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