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Theory of Constraints Part II: TOC Concepts. Drum – Buffer – Rope (DBR)  DBR is the TOC concept of production scheduling.  Drum:  Comes from a story.

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Presentation on theme: "Theory of Constraints Part II: TOC Concepts. Drum – Buffer – Rope (DBR)  DBR is the TOC concept of production scheduling.  Drum:  Comes from a story."— Presentation transcript:

1 Theory of Constraints Part II: TOC Concepts

2 Drum – Buffer – Rope (DBR)  DBR is the TOC concept of production scheduling.  Drum:  Comes from a story in Eli Goldratt’s book “The goal”.  Q: In a production facility, who sets the pace of the output?  Ans.: The weakest link!

3 Drum – Buffer – Rope (DBR)  In a group of scouts on a journey, the slowest boy is referred to as the Drum.  Dictates the pace for the entire group.

4 Drum – Buffer – Rope (DBR)  On the shop floor, bottleneck sets the pace.  What if there are no bottlenecks on the shop floor?  Ans.: Market demand is the drum!  Once the drum is identified, the maximum pace can be determined.

5 Drum – Buffer – Rope (DBR) Concepts  If the drum is a physical constrained resource, overall planning depends on the capabilities of the resource.  That is, planning around the drum/bottleneck.  Difference with MRP:  MPS (Master Production Schedule) is created first!  In TOC, MPS is the result of bottleneck planning.  If drum is the market, MPS is generated from demand without considering capacity vs. load!

6 Drum – Buffer – Rope (DBR)  Buffer: represents a protection for the drum.  Ensures the drum never runs out of work.  Can contain raw material to feed the drum.  Can also contain ‘time’.  Means providing enough time for the drum to finish its tasks.  All resources that prepare input must be given enough time (including waiting and moving time) to overcome any delays.

7 Drum – Buffer – Rope (DBR)  Difference between Buffer and Lead Time:  Lead time* here applies to a single production step.  Time Buffer covers area between Raw Materials to the Drum. If no bottleneck exists, it spans between Raw Materials and Shipping. Lead Time*- The total amount of time between the recognition of a required task, operation or process and its completion. Elements of lead time can include order entry, material accumulation, machine setup, queue, processing, move and other activities.

8 Drum – Buffer – Rope (DBR)  Rope:  Implements the buffer.  A procedure to release materials only when the schedule dictates to do so.  Prevents early release of material before it is due.  Prevents accumulation of WIP. Material s

9 DBR Summary  Once found, the constraint becomes the DRUM.  Constraint should always be protected by a BUFFER.  ROPES link constraint to control points for release of raw materials into the factory.

10 DBR Summary  Give upstream (non-constraint) operations extra protective capacity to allow for surge capacity to feed the buffer in front of the constraint.  Execute downstream operations asap to avoid any delays in the output of the constraint.  In theory, flow of constrained parts should never stop until they reach the customer.

11 Analysis  If decisions are made such that the organization can:  Increase overall Throughput  Decrease overall Inventory  Decrease overall Operating Expense then, Decisions will be good for the business in general.

12 Throughput Analysis  Key elements:  System Throughput  System Constraints Decision Making Cost Based Continuous Improvement of Processes

13 Are the Organization’s Operations Moving Towards the Goal?  Three operational measurements:  Throughput (TP)  The rate at which the system makes money through sales;  TP = Selling Price – Cost of Raw Materials  Excludes labor  operating expense.

14 Are the Organization’s Operations Moving Towards the Goal?  Three operational measurements:  Inventory  The money the system spends on things it intends to sell.  Includes:  Conventional inventory.  Land.  Vehicles, plant, equipment.  Excludes:  WIP Labor added.

15 Are the Organization’s Operations Moving Towards the Goal?  Three operational measurements:  Operating Expense †  Moneys spent by the system turning Inventory into throughput.  Includes moneys poured into a system to keep it operational.  Heat, power, scrap materials, depreciation. † Those expenses in to the normal operation of the business, excluding interest expense and one- time charges. The actual expense a company incurs while maintaining a business. Also referred to as Overhead.

16 How to Compute Results for the Organization?  Net Profit (NP) NP = Throughput – Operating Expense  Return on Investment (ROI) ROI= (Throughput – Operating Expense) Inventory  Productivity (P) P = Throughput / Operating Expense  Turnover (T) T = Throughput / Inventory

17 Example

18 Relationship between TOC TQM JIT

19 TOC - TQM - JIT  All created in the 80’s and 90’s.  All claim to be the solution to existing management problems.  At the end, they are different facets to the same philosophy!

20 TOC - TQM - JIT  TQM  Uses the concept of System  System Thinking  Process Measurement  Never ending Process Improvement.

21 TOC - TQM - JIT  TOC  Is a focused methodology to perform SYSTEMS THINKING on the business entity as a whole.  Focuses on making changes to constraints that limit System profitability

22 TOC - TQM - JIT  JIT  Emphasizes reduction of inventory and resource scheduling.  Really an application of TOC to one aspect of the business.

23 TOC - TQM - JIT How does TOC fit with TQM?  TQM  involves techniques for improvement.  TOC  Helps focus and follow through.  TOC helps focus quality improvement efforts on the right place to improve.

24 TOC - TQM – JIT Relationship JITMRP TQM TOC

25 Theory of Constraints: TOC Concepts End of Part II

26 Adapted from: Schragenheim, Eli “The Theory of Constraints”, Lionheart Publishing, THE THEORY OF CONSTRAINTS: Making Process Decisions Under Conditions of Limited Resources, Capacities, or Demand -


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