Chapter
5 Constraint Management
1. Define constraint
2. Define capacity
3. Three types of constraints
a.
b.
c.
4. Define bottleneck
1. Theory of Constraints
1. Performance measures in TOC
a. Inventory (I):
b. Throughput (T):
c. Operating Expenses (OE):
d. Utilization (U):
2. 7 Key principles of TOC
a.
b.
c.
d.
e.
f.
g.
3. Application of TOC involves five steps.
a. Step 1:
b. Step 2:
c. Step 3:
d. Step 4:
e. Step 5:
2. Managing Bottlenecks in Service Processes
1. Define throughput
2. Where can bottlenecks occur?
3. Define setup time
4. Identifying bottlenecks in service processes: Example 5.1
3. Managing Bottlenecks in Manufacturing Processes
1. Identifying bottlenecks in manufacturing processes
a. Example 5.2 Diablo Electronics
Diablo Electronics manufactures four unique products (A, B, C, and D) that are fabricated in
five different workstations (V, W, X, Y, and Z). Each workstation is staffed by a dedicated
8-hour shift worker. Batch setup times are negligible. The flowchart that denotes the path
each product follows through the manufacturing process is shown in text Figure 5.2, where
each product’s price, demand per week, and processing times per unit are indicated as well.
Inverted triangles represent purchased parts and raw materials consumed per unit at different
workstations. Diablo can make and sell up to the limit of its demand per week, and there are
no penalties for not being able to meet all the demand.
Which of the four work stations (W, X, Y, or Z) has the highest total workload?
Solution:
Using utilization to determine the bottleneck is not necessary, because the denominator in
the utilization ratio is the same for every work station, with one worker per machine at
Work
Station
Load from
Product A
Load from
Product B
Load from
Product C
Load from
Product D
V
W
X
Y
Z
b. Relieving Bottlenecks
• The key to preserving bottleneck capacity is to:
• The long-term capacity of bottleneck operations can be expanded in various ways.
c. Drum-Buffer-Rope (DBR) Systems
• The bottle neck schedule is the drum because it:
• The buffer is the:
• The rope represents:
4. Applying the Theory of Constraints To Product Mix Decisions
1. Determining the Product Mix Using Contribution Margin
2. Application 5.1: O’Neill Enterprises
O’Neill Enterprises manufactures three unique products (A, B, C) that are fabricated and
assembled in four different workstations (W, X, Y, Z) using a small batch process. Each of the
products visits every one of the four workstations, though not necessarily in the same order.
Batch setup times are negligible. A flowchart that denotes the path each product follows through
the manufacturing process is shown below, where each product’s price, demand per week, and
processing times per unit are indicated as well. Inverted triangles represent purchased parts and
raw materials consumed per unit at different workstations. O’Neill can make and sell up to the
limit of its demand per week, and there are no penalties for not being able to meet all the demand.
Each workstation is staffed by a worker dedicated to work on that workstation alone, and is paid
$12 per hour. Variable overhead costs are $8000/week. The plant operates one 8-hour shift per
day, or 40 hours/week.
Which of the four workstations W, X, Y, or Z has the highest total workload, and thus serves as
the bottleneck for O’Neill Enterprises?
Flowchart for Products A, B, and C
Solution
Identify the bottleneck by computing total workload at each workstation. The firm wants to
Work
Station
Load from
Product A
Load from
Product B
Load from
Product C
Total Load
(minutes)
W
X
Y
Z
3. Determining the product mix: Application 5.2: O’Neill Enterprises (continued)
The senior management at O’Neill Enterprises wants to improve the profitability of the firm by
accepting the right set of orders. Currently, decisions are made to accept as much of the highest
contribution margin product as possible (up to the limit of its demand), followed by the next
highest contribution margin product, and so on until no more capacity is available. Since the firm
$7
Step 1 at
Workstation W
(10 min)
Step 3 at
Workstation X
(9 min)
Finish with Step 4
at Workstation Z
(16 min)
Product: A
Price:
$90/unit
Demand: 65 units/wk
Raw Materials
Product A
$9
Step 1 at
Workstation X
(12 min)
Step 3 at
Workstation Y
(10 min)
Finish with Step 4
at Workstation Z
(13 min)
Raw Materials
Product B
$10
Step 1 at
Workstation Y
(5 min)
Step 3 at
Workstation W
(12 min)
Finish with Step 4
at Workstation Z
(10 min)
Raw Materials
Product C
$5
$5
Purchased Part
Purchased Part
Product: B
Price:
$85/unit
Demand: 70 units/wk
Product: C
Price:
$80/unit
Demand: 80 units/wk
$6
Purchased Part
Step 2 at
Workstation W
(10 min)
Step 2 at
Workstation X
(10 min)
Step 2 at
Workstation Y
(15 min)
cannot satisfy all the demand, the product mix must be chosen carefully. Jane Hathaway, the
newly hired production supervisor, is knowledgeable about the theory of constraints and
bottleneck based scheduling. She believes that profitability can indeed be approved if bottleneck
resources were exploited to determine the product mix. What is the change in profits if instead of
the traditional method that O’Neill has used thus far; a bottleneck based approach advocated by
Jane is used instead for selecting the product mix?
Solution
Decision rule 1: Traditional method
Contribution Margin
Step 2:
Work Center
Starting
After 80 C
After 70 B
Can Only Make 43 A
W
2400
X
2400
Y
2400
Z
2400
Decision Point:
Step 3: Compute profitability for the selected product mix.
Profits
Revenue
Materials
Overhead
Labor
Profit
Manufacturing the product mix of:.__________________
5. Managing Constraints in Line Processes
1. Line Balancing
a. Definitions
b. Precedence diagram
c. Desired output rate
d. Cycle time
r
c1
=
Product A
Product B
Product C
Contribution Margin per minute
where
=c
cycle time in hours per unit
=r
desired output rate in units per hour
e. Theoretical minimum
TM = t
c
(round up)
where
=
t
total time required to assemble each unit
f. Idle time, efficiency, and balance delay
• Idle time
−= tnc
• Efficiency (%)
( )
100
nc
t
=
• Balance delay (%) = 100 – Efficiency
Application 5.3
A plant manager needs a design for an assembly line to assembly a new product that is
being introduced. The time requirements and immediate predecessors for the work
elements are as follows:
Work
Element
Time (sec)
Immediate
Predecessor
A
12
–
B
60
A
C
36
–
D
24
–
E
38
C, D
F
72
B, E
G
14
–
H
72
–
I
35
G, H
J
60
I
K
12
F, J
Total =
435
Draw a precedence diagram (finish the one started)
If the desired output rate is 30 units per hour, what are the cycle time and theoretical
minimum?
== r
c1
==
c
t
TM
A
B
C
G
H
G
E
D
Suppose that we are fortunate enough to find a solution with just four stations.
What is the idle time per unit, efficiency, and the balance delay for this solution?
Idle time
=−= tnc
Efficiency (%)
( )
== 100
nc
t
Balance delay (%) = 100 – Efficiency =
g. Finding a solution
• Using trial and error, assign the work elements to stations to best balance the
work load on each station, and minimize the number of stations required.
• Using trial and error, find a solution to the problem, entering your answers in
the table below.
Station
Work
Elements
Assigned
Cumulative Time
Idle Time
(c = 120)
1
2
3
4
5
2. Rebalancing the Assembly Line
3. Managerial Considerations
a.
b.
c.
d.