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Optimized Production Technology (OPT) Prepared by Clint Ward Brigham Young University.

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Presentation on theme: "Optimized Production Technology (OPT) Prepared by Clint Ward Brigham Young University."— Presentation transcript:

1 Optimized Production Technology (OPT) Prepared by Clint Ward Brigham Young University

2 A Brief Overview OPT DefinedImportance Operational Measures Goal of OPT Brainstorming Activity Nuts & Bolts Real World Example Rules of OPTExercise

3 OPT Defined Optimized Production Technology is a planning & production system focused on throughput maximization by alleviating bottlenecks (Precursor to Theory of Constraints)

4 Why is OPT important? A chain is no stronger than its weakest link An organization can only speed up the length of the entire process if the bottleneck is alleviated

5 OPT Operational Measures Throughput = the rate at which the system generates money through sales Inventory = all the money that the system has invested in purchasing things which it intends to sell Operational Expense = all the money the system spends to turn inventory into throughput

6 The Goal of OPT Increase throughput while simultaneously reducing both inventory and operational expense

7 Brainstorming Exercise Pull out a piece of paper Identify all of the area or processes on the floor Jot down bottlenecks –Take 3-4 minutes; allow more time if needed to visit floor and find bottlenecks

8 OPT Nuts & Bolts Dependent Events: all processes count on the completion of sequential operations Statistical Fluctuations: process times fluctuate around an average Due to these facts, a plants capacity must be unbalanced and bottlenecks are inevitable

9 OPT Nuts & Bolts (cont.) First, Identify bottlenecks Second, Increase capacity of bottlenecks by minimizing machine idle time, avoid processing defective parts, avoid processing outside current demand Third, Shift work off of bottlenecks and give it to non-bottlenecks

10 Obstacles 1.Knowing what to change 2.What to change to 3.How to institute the change

11 Real World Example: Dow Corning Corporation Our plants on-time delivery was 50% and we were carrying over 100 days of inventory. We had six months to turn things around. Within my unit we identified the bottleneck and began to focus our resources there. By the time the six months were up, we had started to make significant changes using The Goal as a reference. When I left the department cycle time had reduced 85%, operator headcounts reduced 35% through attrition, WIP were down 70%. On-time delivery was increased to 90%. -The Goal by Eli Goldratt

12 Ten Rules of OPT 1.Utilization and activation of a resource are not the same 2.The level of utilization of a non-bottleneck is determined not by its own potential but by some other constraint in the system 3.An hour lost at a bottleneck is an hour lost for the total system

13 Ten Rules of OPT 4. An hour saved at a non-bottleneck is just a mirage 5. Bottlenecks govern both the throughput and inventory in the system 6. The transfer batch may not and often should not be equal to the process batch 7. The process batch should be variable, not fixed

14 Ten Rules of OPT 8. Capacity and priority should be considered simultaneously, not sequentially 9. Balance flow, not capacity 10. The sum of local optima is not equal to the global optimum

15 Break-out Exercise Pull out your brainstorm lists of bottlenecks Gather in groups of 3-4 Round-robin through everyones lists (3 min) Everyone pick 1 bottleneck (should have duplicates) and jot down ways to increase capacity Discuss effects of the changes

16 Summary Any process can be improved! Focus on the bottlenecks! Identify ways to increase bottleneck capacity! Never forget the goal: Increase throughput while simultaneously reducing both inventory and operational expense

17 Readings List Ellram, L., Fawcett, S., Ogden, J. (2007), Supply Chain Management, Pearson Education, Inc., Upper Saddle River, New Jersey. Goldratt, E., Cox, J. (2004), The Goal, North River Press, Great Barrington, MA. _precursor_to_theory_of_constraints.html 2%20OPT.pdf g _chunk_g _ss7-1


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