1. © Washington State University-20101 Fundamental Exam Review Applications: DBR Segment The Theory of Constraints jholt@wsu.edu http://www.engrmgt.wsu.edu/ James R. Holt, Ph.D., PE Professor Engineering & Technology Management Disclaimer: The material in these slides were developed over time and represents Dr. Holt’s personal views and approach to TOC. It is not the view of Washington State University nor TOCICO. It may be dated, incomplete or absolutely wrong. While the text and figures in this presentation are helpful to facilitate teaching and discussion of these topics, without the words that go with the slides, the presentation is not complete and may not even make sense. This material is made available in the public domain as a service. Individuals may use this material as resources to teach their own TOC review seminars as long as they give reference to the source. There is no promise nor expectation that these materials are either necessary or sufficient to pass any of the TOCICO certification exams. Anyone using these materials should continue to study from the many other sources of excellent TOC literature available. In many cases, common knowledge is included here without reference. If you would like to improve any of these files, please do so. Your contribution will be included in future postings. Dr Holt.

2. © Washington State University-2010 2 TOCICO Segmented Fundamentals Exam Fundamentals Certificate Multiple Choice Exam (Identify, Exploit, Subordinate, Elevate, Go to Step 1) Fundamentals Certificate of TOC Philosophy Fundamentals Certificate of TOC Thinking Processes Fundamentals Certificate of TOC Applications Fundamentals Certificate of TOC Finance & Measures Inherent Potential Inherent Simplicity Inherent Win-Win Five Focusing Steps Three Questions Conflict Cloud Negative Branch Ambitious Target DBR T, I, OE PQ Type Problem Project Management Replenishment

3. © Washington State University-2010 3 Topics in TOC Operations Locating Capacity Constrained Resource Sizing Buffer (50% of existing to start) Rope Control (release) Buffer Management Simplified- DBR (finished goods buffers controlling release) Make to Order Make to Stock

4. © Washington State University-2010 4 TOC and Physical Process Flows I previously introduced the linear flow line at left. This type of flow is often called an “I” line. “I” standing for a vertical line as shown at the bottom. Raw material flows from Raw Material at the bottom upward to Finished Goods at the top. In reality, there are few such simple lines making a single commodity. But the “I” form itself is common. Consider: A trip to the hospital (you are the RM and FG). You go to the office for processing, see the doctor, pay, go get the prescription, go home, get better. I hope it doesn’t take too long. Process A B C D E RM FG Capability Parts 7 9 5 8 6 per Day Market Request 11 RM FG

5. © Washington State University-2010 5 Moving the Constraint I mentioned, “You can choose the constraint.” How is that possible? If we progress normally, we find the constraint (Step 1) exploit the constraint (Step 2), subordinate everything else to the constraint (Step 3), elevate the constraint (Step 4), and if the constraint is eliminated, find the new constraint (Step 5). If we elevate the constraint far enough, we to move it. Actually, any one of the processes in our “I” line can be improved. Any one process can increase its capacity. So, by picking and choosing which processes to improve (elevate) we can move the constraint to the location where we want it to be. Ah! This creates an interesting question. Where is the best place to have the constraint? At the middle as shown? At the beginning (bottom) or at the top (end)? RM FG

6. © Washington State University-2010 6 There are many factors in choosing the best location for the constraint. Retail sales, traditional management wants the constraint to be in the market (buffer Finished Goods) *. If you are selling diamonds, you probably want the constraint to be in the Raw Material. Hum? Two selling markets with opposite recommendations? What I am I do do? Things to consider.  Capacity is obviously an issue. How hard is it to get? What does it cost? Do I want the constraint to be the $10,000 Drill or the $100,000 Mill?  Predictability is important. You want a constraint that produces 5±5 or 5±1? Which helps you plan ahead?  Quality and scrap are an issue as well. After the constraint, we want zero scrape. Resolve quality issues before the constraint.  Ease of expansion. Try to locate the constraint where you can easily surge to capture unexpected opportunities  Location of Inventory is key. You will have buffers. Try to locate them naturally. Cost of inventory is often a real issue (use raw material costs).  Control is the most important factor in locating the inventory. Who is in control and how responsive is the system? RM FG *TOC tries to avoid this option ?

7. © Washington State University-2010 7 Choosing the Constraint for Control Purposes Who is in control if the constraint is in Raw Material? Not you. Who is in control if the constraint is in the Market? Not you. Those are both bad choices. If you are stuck in that world, you should take action to put yourself back in control (Read Its Not Luck to learn how to create unrefusable offers to increase your market). If the constraint is at the beginning, are you more or less responsive to customer demand? Probably Less. It takes time to move the product through the system. If the constraint is at the end, are you more or less responsible to the customer demand? Could be less if the material in your buffer is not the right item. You have to clean out your buffer before you can get the right part to the customer. It seems there is no right answer. Well there is, but the answer depends a lot upon the physical system you are dealing with. But, we can make some general statements. RM FG ?

8. © Washington State University-2010 8 Consider the “V” Plant In a “V” plant structure, relatively few Raw Materials are used to make a wide variety of Finished Goods. Molten steel, once rolled into a thickness can be cut into widths, and treated. But, once it’s 1/2 inch thick and 12 inches wide, it is very hard to be 2 inches thick and 36 inches wide. Oil is refined into many types. Metal cut, formed, drilled coated is not usually returned to its Raw Material State. The main problem in “V” Plants is stealing. Individual processes, in an effort to improve efficiencies or reduce set-ups will produce more than ordered or change the production schedule to ‘look better’ locally. This problem creates havok with too much inventory in some places and too little in other places. In the “V” Plant, it is much better to have the control at the beginning. Buffer an early process and then flow the product quickly to the Finished Goods. The “V” Plant unit measure CAN NOT BE QUANTITY PRODUCED/TIME!!!!!!!!!!!!!! RM FG V-Plant

9. © Washington State University-2010 9 Consider the “A” Plant In the “A” Plant structure, many Raw Materials combine to produce few Finished Goods. This is mostly an assembly process. The main problem in “A” plants is with coordination. There are a lot of assembly operations. If one of the items is not immediately available for an assembly, the assembly is delayed. There is better control if the constraint is at the apex of the A. There are fewer buffers, better response time and less inventory over all. It is important to  Value inventory at the Raw Material cost (Aluminum sheet with a bunch of holes is worth less to an outsider than a solid sheet -- not more. A partly processed part has no extra value until it is sold.)  Choke off release of Raw Material to just the amount needed to replenish buffers. (Excess inventory delays work, creates quality problems, prevents improvements.) RM FG A-Plant

10. © Washington State University-2010 10 Consider the “T” Plant In the “T” Plant structure, work flows through a common line to a point where the common parts are ‘customized’ into specialized Finished Goods. The main problem in a “T” plant is having enough of the right materials at the point where the common components become assembled (or become defined) as the different Finished Goods. In such a line, it makes sense to control the flow at the specialization position. You have the fastest response yet minimize inventory. FG T-Plant RM

11. © Washington State University-2010 11 Hybrids “X” and “Diamonds” There are hybrid combinations of plant of course. Looking at the “X”, with many raw materials brought together into a single process and then forming many other products (abrasive paper for instance) seems to have an obvious control point at the center. The “Diamond” shape should probably have its constraint near the end to avoid cluttering up the complex internal processes. FG RM FG

12. © Washington State University-2010 12 Working With Your Plant It is not always obvious what type plant you have. The buildings and material flow aren’t always laid out in an “I” or “A” or “V” or “T” pattern. It is a theoretical plant that we are discussing. Look at the conceptual structure. Learn how to function in all the theoretical structures and then you will be able to formulate the best policy for your system. Hum? Is college an “I” Plant, a “A” Plant or an “V” Plant? That depends. If you are becoming a nurse, its probably an “I”. If you are studying semi-conductors, its probably an “A”. If you are studying management, it is probably a “V”. Well, that is an interesting puzzle.

13. © Washington State University-2010 13 Let’s Play a Game! The Dice Game-Set Up I want you to simulate the ‘match game’ found in The Goal, pages 104-112. But we will do it in a more fun way. You will need six fair dice (one die will do if you share). Gather some tokens (lima beans, marbles, or toothpicks work well. Note: Jelly beans and chocolate chips tend to disappear) Get two cups, one for Raw Material and one for Finished Goods Arrange your play area as on the left. Create Six Processes (A, B, C, D, E, F) between Raw Material and Finished Goods. RMFG A B C D E F Processes (move token across the line) Storage areas for Work- in-Process Storage of Raw Material and Finished Goods

14. © Washington State University-2010 14 The Play You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence. RMFG A B C D E F

15. © Washington State University-2010 15 The Play RMFG A B C D E F Day 1. A Rolls a 5 You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence.

16. © Washington State University-2010 16 The Play RMFG A B C D E F Day 1. A Rolls a 5, B Rolls a 3 You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence.

17. © Washington State University-2010 17 The Play RMFG A B C D E F Day 1. A Rolls a 5, B Rolls a 3, C Rolls a 3 You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence.

18. © Washington State University-2010 18 The Play RMFG A B C D E F Day 1. A Rolls a 5, B Rolls a 3, C Rolls a 3, D Rolls 6 RMFG A B C D E F You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence.

19. © Washington State University-2010 19 The Play RMFG A B C D E F Day 1. A Rolls a 5, B Rolls a 3, C Rolls a 3, D Rolls 6, E Rolls a 2 You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence.

20. © Washington State University-2010 20 End of Day One RMFG A B C D E F Day 1. A Rolls a 5, B Rolls a 3, C Rolls a 3, D Rolls 6, E Rolls a 2, F Rolls 1 and puts it in the cup. You play the game for ten days, one day at a time(each process gets to roll a die ten times-once each day-in the order prescribed). The work progresses from left to right. Each day, A rolls first, takes however many tokens are rolled from the RM cup and moves them across the line to the WIP (Work in Process) location between Line A and B. B then rolls and tries to move tokens from the left WIP location between A and B to the right WIP location between B and C, if available. Click a few times and I’ll show you the sequence.

21. © Washington State University-2010 21 The Play Continues Day 2 starts with the WIP (tokens in places left from Day 1) and continues in the same fashion. Starting Day 2, worker A rolls, takes from the RM cup and moves more tokens to the space between A and B. Each process takes it’s turn moving tokens during the day. The last process F ends the day by rolling an moving the number of tokens shown on the die (if they are available) into the FG cup. All players move the maximum of what they roll or what inventory is available to process for that day’s roll. RMFG A B C D E F

22. © Washington State University-2010 22 The Results Now, we play for ten days. How many tokens will be in the Finished Goods Cup? Take a guess before you play. Each die averages 3.5 dots per roll. There are 10 rolls. Each process should produce 35 dots on the average over ten days. Do you expect 35 in the FG Cup? To make sure we understand what is happening in this game, lets keep some records. For one, we need to make sure we are using Fair Die. RMFG A B C D E F ?

23. © Washington State University-2010 23 Keeping Track of our Rolls Keep track of the rolls you make. Make sure each process (die) produces as the company expects-- close to 35. In fact, lets reward the workers. Any process who rolls better than 35 dots in 10 days receives a “Superior Performance Award” Any process who does better than 40 receives a “Sustained Superior Performance Award” But, if any process rolls less than 25 dots, we will have to let them go. Your Team will probably earn a few Awards. Process A B C D E F 5 3 3 6 2 1 2 4 2 5 1 4 1 5 3 2 4 6 and so on … __ __ __ Sum Totals for each Process Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10

24. © Washington State University-2010 24 Keep Track of Your Inventory When you finish the Dice Game, you will have some unexpected results. We need to produce at least 30 items to make a profit. The plant has such a bad history, one more 10 day period of loss (deliveries below 30) and we will have to close the plant. So, you’ll probably want to keep records of your inventory so you can figure out what happened. Record the WIP (Work in Process) remaining between each workstation at the end of each day as you go. Similar to below: Process A Wip B Wip C Wip D Wip E Wp F FG FG Total 5 2 3 0 3 0 6 1 2 1 1 1 1 2 0 4 2 2 0 5 2 1 0 4 2 3 1 0 5 0 3 1 2 0 4 0 6 4 7 and so on … __ __ __ __ __ __ __ Sum Totals for each Process Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 You see the WIP changes as the days go by. If you want, you can calculate the average WIP for each position to see who is the problem. Knowing the WIP at the End of the 10 periods also helps you understand your system.

25. © Washington State University-2010 25 The Report Play the Dice Game for ten days. Record the individual Process results. Determine which of your Processes received which awards (or were laid off). Some of you are pretty concerned about my letting a person go if they produce less than 25 parts. But, this is a very rare case. Rolling a fair die multiple times soon generates a near normal distribution. There is less than a 5% chance of producing less than 25 dots in ten rolls. Besides, this is more than generous in light of our production demands. Cooperate has told us, “If you don’t produce at least 30 tokens in that FG Cup, they are going to close the plant!” What we want is everyone to do good so we can keep the plant open. Make any recommendations you want on how to improve the plant.

26. © Washington State University-2010 26 Not Too Good! Let’s try again. Clearly, you didn’t have enough Work-In-Process Inventory to avoid he devastating impact of the combination of Variability and Interdependence (which occur in almost every system). Let’s start with Six tokens at each work center and play for ten days. (AH, much better)! Now, without starting over, continue to play for another ten days (How was production then?) What would happen if we go ten more days? Hum? RMFG A B C D E F ?

27. © Washington State University-2010 27 More on Dice Games Some of you will find the Dice Game fascinating. You will play it over and over and dumbfound your friends. That’s ok, but don’t blame me if your social life goes to pot. If you can’t get enough, you can try a few more options I’ve documented at: http://www.wsu.edu/~engrmgmt/holt/em530/Docs/DiceGames.htm http://www.wsu.edu/~engrmgmt/holt/em530/Docs/DiceGames.htm

28. © Washington State University-2010 28 Looking at DBR from Several Points of View By now you have:  Overview of DBR and some theory  Played the Dice Game  You’ve Read The Goal at least once (3 or 4 times is probably enough)  We are comfortable with PQ (exploiting Octane)  What’s left? Don’t we know it all?

29. © Washington State University-2010 29 Understanding DBR You still have some work to do. We need to understand Buffer Management What is that? Five Focusing Steps: 1. Identify the Constraint 2. Decide how to Exploit the Constraint 3. Subordinate all else to the above decision 4. Elevate the Constraint 5. Warning, Warning. If the constraint moves, start over at step 1. Buffer Management

30. © Washington State University-2010 30 Review--Where are the Buffers? There are four buffers to date:  Constraint Buffers  Raw Material Buffers  Shipping Buffers  Assembly Buffers Where is each one on this process flow? Do you know know why? FG RM RM RM Work Flow 1 5 4 32 8 7 6 Note: The implementation of the Assembly Buffer is confusing in many situations. And, its purpose is weak. The current thinking leans towards eliminating the Assembly buffer in production. Then, the Shipping Buffer is the time from material release to finished goods deliver and subsumes the Constraint Buffer.

31. © Washington State University-2010 31 Review: Where are the buffers? Locate the Four Buffers  Constraint Buffers  Raw Material Buffers  Shipping Buffers  Assembly Buffers Why? FG RM RM RM Work Flow 1 5 4 32 87 6 11 109 12 FG1314 Why not just have one Assembly Buffer at 5?

32. © Washington State University-2010 32 Review: Where are the buffers? Locate Buffers  Constraint  Raw Material  Shipping  Assembly Where (when) does a buffer start? When does it end? RM RM RM RM RM Work Flow 1 54 32 8 7 6 11 10 9 12 FG 13 14 15 Market Constraint 90% of the time

33. © Washington State University-2010 33 Review: Where are the buffers? Locate Buffers  Constraint  Raw Material  Shipping  Assembly Where (when) does a buffer start? When does it end? RM Work Flow FG 15432 8 7 6 10 9 11 12 13 Market Constraint FG

34. © Washington State University-2010 34 A Buffer is ‘Time’ Time for what?  Safety?  Cushion?  Variability?  Confidence?  Comfort? RM Constraint 1 1 15 How big should the buffer be? Process A Much more buffer is needed when non- constraints are near the constraint capacity. 2 Constraint RM 2 3 25 Process B 2 RM Constraint 4 4.5 45 Process C 2 HOW TO DECIDE?

35. © Washington State University-2010 35 The Starting Position We experienced in the Dice Game the devastating Effects when Interdependence AND Variability both exist in the system (ALMOST EVERY SYSTEM). The only way to ever hope to get production anyway near the average capacity of the processes is to have Work-In- Process Inventory everywhere, and Lots of it! And yet, this solution degrades to pretty poor performance over time. RMFG A B C D E F ? To make this work, the WIP Inventory must be at least 5 per work center (30)

36. © Washington State University-2010 36 The DBR Approach First, Identify the Constraint. For this case, let’s make a constraint. Modify D’s die. That is, let’s change the dotes. When D rolls, if D rolls a 5, change it to a 4. If D rolls a 6, change it to a 4. So the new Die looks like, 1,2,3,4,4,4. This is 18 dots spread over six sides for an average of 3/side. Increase the capacity for A,B,C, E and F to 4/side by just ignoring the side with the 1. Just assume the die is five sided: 2, 3, 4, 5, 6. for 20 dots or average of 4/side. RMFG A B C D E F ? To make this work, the WIP Inventory must be at least 5 per work center (30)

37. © Washington State University-2010 37 The DBR Approach First, Identify the Constraint. For this case, let’s make a constraint. Modify D’s die. That is, let’s change the dotes. When D rolls, if D rolls a 5, change it to a 4. If D rolls a 6, change it to a 4. So the new Die looks like, 1,2,3,4,4,4. This is 18 dots spread over six sides for an average of 3/side. Increase the capacity for A,B,C, E and F to 4/side by just ignoring the side with the 1. Just assume the die is five sided: 2, 3, 4, 5, 6. for 20 dots or average of 4/side. RMFG A B C D E F ? To make this work, the WIP Inventory must be at least 5 per work center (30) 4 4 4 3 4 4 X Constraint

38. © Washington State University-2010 38 Buffer Sizing If there is Not Enough WIP, we can’t get production volumes. If there is too much, we lose control, delay the flow and chaos occurs. The Bath Tub Curve WIP Curve RMFG A B C D E F ? When is WIP Inventory a problem? 4 4 4 3 4 4 X Constraint Problems! Too Little Too Much Anywhere in here is OK. To start, just Cut WIP (typical flow times in half)

39. © Washington State University-2010 39 Buffer Sizing If there is Not Enough WIP, we can’t get production volumes. If there is too much, we lose control, delay the flow and chaos occurs. The Bath Tub Curve WIP Curve RMFG A B C D E F ? When is WIP Inventory a problem? 4 4 4 3 4 4 X Constraint Problems! Too Little Too Much Anywhere in here is OK. To start, just Cut WIP (typical flow times in half)

40. © Washington State University-2010 40 DBR Approach Third, Subordination. Where should the WIP Be Held? We need to protect the Constraint from starving. Let’s move the WIP to where it helps. RMFG A B C D E F ? Cutting WIP from 30 to 15 is safe, but… 4 4 4 3 4 4 X Constraint

41. © Washington State University-2010 41 DBR Approach Third, Subordination. Where should the WIP Be Held? We need to protect the Constraint from starving. Move the WIP to where it helps. That should do it. But, We have so much Safety in our Buffer. And A can out produce D. We need to prevent OVER PRODUCTION! Don’t allow A to produce any more than D produces. Keep Buffer at or below 15. Tie the Rope RMFG A B C D E F ? Cutting WIP from 30 to 15 is safe, but… 4 4 4 3 4 4 X Constraint

42. © Washington State University-2010 42 Tie the Rope (of DBR) Third, Subordination. Don’t allow A to produce any more than D produces. Keep Buffer at or below 15. Each day A examines the WIP. If there are 15 in the Buffer, DO NOT WORK. If less than 15, work just enough to replace the Buffer to 15 Pull WIP into the system Only at the Rate the Constraint Produces. What is the average outcome? RMFG A B C D E F ? Control the Buffer size with the Rope 4 4 4 3 4 4 X Constraint

43. © Washington State University-2010 43 Shape of the Buffer Where should the buffer materials be located? What is protecting what? If all products take the same time on the constraint, we can count parts. Say buffer is 10 parts. What does it look like? RM Constraint RM Constraint RM Constraint Buffer Time All three views are possible views of the Constraint Buffer.

44. © Washington State University-2010 44 Replenishment is the Key 0 10 20 30 40 50 Per Week A B C D E Consider market constraints for products A, B, C, D, E with weekly demand shown What Minimum Buffer Size would you recommend for each product? Market Constraint Demand

45. © Washington State University-2010 45 Replenishment is the Key 0 10 20 30 40 50 Per Week A B C D E Consider market constraints for products A, B, C, D, E with weekly demand shown What Minimum Buffer Size would you recommend for each product? Market Constraint Demand

46. © Washington State University-2010 46 Replenishment is the Key 0 10 20 30 40 50 Per Week A B C D E Consider market constraints for products A, B, C, D, E with weekly demand shown What Minimum Buffer Size would you recommend for each product? If Replenishment time is one week! If Replenishment time is one day! Ropes? If Replenishment time is two weeks! Market Constraint Demand

47. © Washington State University-2010 47 Buffer Reduction Efforts Solution called S-DBR What can we do to reduce buffer sizes? Focus on Replenish- ment! Market Constraint Demand A B C D E Could Adding a Constraint help? 50 100 150 Aggregate Constraint Demand Ropes? 0 10 20 30 40 50 Per Week

48. © Washington State University-2010 48 Think about the Ropes A B C D E Ropes Pull the Product. Which Rope Pulls What?

49. © Washington State University-2010 49 Consider Possible Advance Warning A B C D E Sell an A, Constraint Produces A, Release Raw Material for an A. Sell a C, Constraint Produces C, Release Raw Material for a C. Sell a D, Constraint Produces D, Release Raw Material for an D. Sell a B, Constraint Produces B, Release Raw Material for an B. Sell an A, Constraint Produces A, Release Raw Material for an A. And so on… Ropes are communication! Does the communication go to the Constraint only? Ropes can pull whatever is smart! Read the Precision Power Case on WebCT.

50. © Washington State University-2010 50 A B C D E More about the sequencing of the Work in the Buffer Order Sold: 2 As, 3 Es, 2Cs, 1 A, 10 Bs, 1 A, 2 D, 2 Es, 3 Bs, 2 Es, 2 As, 2 Cs, 4 Ds… Pure Order Sequence in order sold AAEEECCABBBBBBBBBBADDEEBBBEEAACCDDDD … Adjusted Order Sequence to make (Breaking large B batch in two) AAEEEBBBBBCCADDBBBBBEEBBBEEAACCDDDD … Using DBR Replenishing the FG Inventory, the production line should produce as much as possible in the sequence ordered. Reduce Set-up Times to make this possible. Avoid Large Batches that will choke the balancing of many products.

51. © Washington State University-2010 51 Now Managing the Buffer? Adjusted Order Sequence to make AAEEEBBBBBCCAADDBBBBBEEBBEEAAC... Buffer Release Work Order: …CAAEEBBEEBBBBBDDAACCBBBBBEEEAA BEEB BBBB DDAA CCBB BBBE EEAA …CAEEB Order to the Constraint. If the Buffer was a hopper filling right to left, bottom to top... Pull the next Work Order from the bottom of the hopper First order

52. © Washington State University-2010 52 Now Let’s look at the Buffer Correctly As Time Time On Constraint  A: 15 Min  B: 10 Min  C: 20 Min  D: 15 Min  E: 5 Min BEEB BBBB DDAA CCBB BBBE EEAA …CAEEB So, what does this hopper represent? It is the order, but no time is connected. What if I spaced the Products out according to how much time it takes on the constraint?

53. © Washington State University-2010 53 Convert Letters to Time Time On Constraint A: 15 Min B: 10 Min C: 20 Min D: 15 Min E: 5 Min Since 5 minutes is the common denominator, I’ll use 5 mins for each Letter and add dashes of 5 mins to space out the letters in time sequence. --A--A The first half hour on the constraint is then: B-BEEE Second half hour -> : B-B-B- On hour and half -> : C---C- The Second hour -> : A--A-- Second + half -> : BEEB BBBB DDAA CCBB BBBE EEAA …CAAEEB D--D-- Third Hour -> : This stack will be tall. But, it is important to represent the ‘Time blocks’ within the Buffer. Scheduling the constraint

54. © Washington State University-2010 54 Creating a 9 Hour Buffer --A--A B-BEEE B-B-B- C---C- A--A-- BEEB BBBB DDAA CCBB BBBE EEAA …CAAEEB D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- Time on Constraint A: 15 Min B: 10 Min C: 20 Min D: 15 Min E: 5 Min D--D-- ---C-- EE---C -B-B-B AE---A --C--D Since scheduling the constraint is the most important thing about managing DBR, we need to do this. Nine working hours before it is due at the constraint, work for a product is released. Each line is an half hour

55. © Washington State University-2010 55 Rearranging the Buffer Stack --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D That tall stack was unwieldy. But, if we split it into three smaller stacks, it’s not so oppressive. Think of the flow moving through a set of tanks so the Jobs stay in order from beginning to end. Constraint Buffer

56. © Washington State University-2010 56 Buffer Zones --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D Constraint Buffer With the Buffer Split in three sections, we can name the zones. The one closest to the constraint RED. The middle one YELLOW. The zone farthest away from the constraint is Green.

57. © Washington State University-2010 57 We can take a different view of the Buffer --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D AEBD DAAC CBBBB EEEAA BE EBB BBB CDDD DCCA AEEB EAB BBECD A fully loaded buffer

58. © Washington State University-2010 58 The Parts in Zones --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D AEBD DAAC CBBBB EEEAA BE EBB BBB CDDD DCCA AEEB EAB BBECD

59. © Washington State University-2010 59 What if there were problems? --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D AEBD DAAC CBBBB EEEAA BE EBB BBB CDDD DCCA AEEB EAB BBECD XX XX X X X X X X X X X X X X BBBB Freight Truck problems so RM released partial parts over time. Missing 8 Bs! RM

60. © Washington State University-2010 60 An Easier Way to Envision Buffer Status --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D RM XX X X X XXX I’ll replace the missing Pieces in the buffer with a hole. What happens if? Green Zone Hole? Not to worry. Yellow Zone Hole? Watch out-Learn Red Zone Hole? Act Immediately! ACT! ACT!

61. © Washington State University-2010 61 What is the allowable probability of a Zone Hole? --A--A B-BEEE B-B-B- C---C- A--A-- D--D-- -B-B-- -B-B-B -B-BEE A--AEE -C---C D--D-- ---C-- EE---C -B-B-B AE---A --C--D RM Green Zone 60% Yellow Zone 30% Red Zone 5% Prob of Parts In the Zone At ConstraintJust Released<-Time Away Acceptable Region UnAcceptable

62. © Washington State University-2010 62 The Buffer Zone Concept Works for ALL Buffers Prob of Parts In the Zone At Protection PointAt Release Point <-Time Away Acceptable Region UnAcceptable Constraint Buffers, Finished Goods Buffers, Supply Buffers, Assembly Buffers are reported the same way. Green Zone 60% Yellow Zone 30% Red Zone 5%

63. © Washington State University-2010 63 So, what about Buffers? The are critical They are not optional They are integrated with the Constraint and the Rope Buffers are the KEY MANAGEMENT TOOL for DBR. We can overcome bad Statistics, terrible Interdependency, common Human Behavior

64. © Washington State University-2010 64 DBR and Human Behavior Issues Drum-Buffer-Rope overcomes the problems of system structure  DBR de-couples interdependency  DBR allows variability to work in our favor  Protects the throughput capacity of the system Measurements should be in place to encourage the right behaviors  Maintain Buffers, Increase throughput, Reduce variability, …  Focus on Flow; Getting Faster and Faster!

65. © Washington State University-2010 65

66. © Washington State University-2010 66 What About Multi Operators? RM FG AB CDE 20 min /part 17 min /part 26 min /part 22 min /part 19 min /part Demand 100 parts/hr 3429443732Staffing 1.7 p/min Flow1.7 p/min

67. © Washington State University-2010 67 Based Upon Buffers, Where Should the Constraint Be? The RM is Very Expensive? RM FG There is lots of Scrap in the Processes? A Very Expensive Machine? We have highly variable processes?  Locate at the least variable. The Market is sporadic?

68. Physical Flow Processes ProcessABCDE RM FG Capability Parts 79586 per Day Market Request 11 The Goal: Produce. The Measure: Throughput The Constraint: Internal or Market 68 © Washington State University-2010

69. Physical Flow Processes Process A B C D E RMRM FG Capability Parts 7 9 5 8 6 per Day Market Request 11 A. Excellent production B. Effective use of Resources D. Focus on Efficiency/Cost C. Effective Delivery D’. Ignore Efficiency/Cost The Conflict Cloud: The Paradigm Shift: We have Efficiency at the Constraint, Buffer Delivery, Watch Costs. 69 © Washington State University-2010

70. The Behavior/Results Process A B C D E RMRM FG Capability Parts 7 9 5 8 6 per Day Market Request 11 The Drum & Buffer Exploit the Constraint The Buffer and Rope Subordinate (de-couple and motivate) the System Processes Common Measures (flow time) Create Teamwork. Buffer Management measures Buffer Penetration Red-> Immediate Action Yellow-> Learn about what to fix next Green-> Allow the system to run Constraint Focus typically results in 20% improvement. Road Runner Ethic, Throughput Accounting, Continuous Improvement, Culture Change. Very effective when Touch time<< Flow time. What do we learn here to apply to Daily Lives? 70 © Washington State University-2010

71. Physical Flow Lessons Learned Look at the Whole--Your whole life Select the Limiting Factor (Self-Examination) Do the Best You Can Subordinate secondary wishes to the Goal Simple, Cooperative Measures Lead to Better Behavior Higher levels of Achievement are Possible by Improving our Current Limiting Factors As You Improve, Continue to Get Better Be Anxiously Engaged in Good Causes (doing and supporting) 71 © Washington State University-2010

72. Strategy and Tactics Tree Rapid Reliable Response http://www.wsu.edu/~engrmgmt/holt/em534/SandTRRR.pdf The Rapid Reliable Response S&T Tree  Improves operations flow  Focuses on selling Value  Includes valuing Rapid Response © Washington State University-2010 72