Drum, Buffer, Rope → If a system contains a bottleneck; the bottleneck is the best place for control. If no bottleneck, go to a Constraint. If neither exists, control can be set anywhere. Drum= control because it strikes the beat for the rest of the system. Two things must happen with a bottleneck: 1. Keep a buffer inventory in front of it to make sure that it always has something to do. Buffer= time buffer. 2. Communicate back upstream so that A only produces as much as D needs. Process Performance Measures → Throughput time - includes the time that the unit actually spends being worked on together with the time spent waiting in the queue. Cycle Time - the elapsed time between starting and finishing a job. (1/ThR) Throughput Rate - the output rate that the process is expected to produce over a period of time. (1/Cycle Time) Utilization - the ratio of the time that a resource is actually activated relative to the time it is available for use. Little’s Law - states a mathematical relationship between throughput rate, throughput time and the amount of WIP inventory. Throughput Time= WIP/ Throughput Rate . Bottleneck - Any resource whose capacity is less than the demand placed upon it. It is a constraint in the system that limits throughput. It m ay be a machine, scarce or highly skilled labor, or a specialized tool. Constraint - resource whose utilization is close to capacity and could be a bottleneck is not scheduled carefully. Make- to- Stock (Push) → The process that produces standard products that can be delivered quickly to the customer. (Based on DEMAND FORECAST) Appeals to families with small children where quick delivery is important. Make to Order (Pull) → The process activated only in response to an actual order. Inventory (both WIP and finished goods) is kept to a minimum. (Based on DEMAND) TOC : 1. Identify the system constraints. (No improvement is possible is constraint is not found) 2. Exploit the system constraints. (Make them as effective as possible) 3. Subordinate everything else to the constraint. (Everything should support the constraint even if it reduces efficiency of non constraint resources) 4. Elevate system constraint. (If output is still inadequate, acquire more of this resource so it no longer is a constraint) 5. If in previous steps, the constraint is broken, go back to step 1, but do NOT let inertia become the system constraint. (After constraint problem is solved, go back to the beginning and start over. Productivity → Common measure of how well a country, industry or business unit is using its resources (or factors of production). Productivity= Outputs/ Inputs : Relative measurement- to be meaningful, it must be compared to something else. Partial Productivity Measure- used if we are concerned about the ratio of outputs to a certain input. Multifactor Productivity- used if we want to look at the ratio of output to a group of inputs. Services : An intangible process that cannot be weighed or measured. Requires some degree of interaction with the customer. Service facility must be designed to handle a customer’s presence. Are heterogeneous- they vary from day to day or hour to hour as a function of the attitudes of the customers and the servers. Perishable and time dependent- cannot be stored. Defined and evaluated as a package of features that affect the five senses. Goods : Tangible output of a process that has physical dimensions. Generally produced in a facility separate from the customer. Can be produced to meet very tight specifications day in and day out with very little variability. Can be stored and may not be perishable. Performance Measures → Throughput - the rate at which money is generated by the system through sales. Inventory - All the money that the system has invested in purchasing things it intends to sell . Operating Expenses - All the money that the system spends to turn inventory into throughput. INCREASE THROUGHPUT WHILE SIMULTANEOUSLY DECREASING INVENTORY AND OPERATING EXPENSE. 4) What are the resulting resource utilizations? The constraint (packing) resource is active all 8 hours of the shift, therefore utilization is (8hrs/8hrs)*100=100% The non-constraint (bread-making) is active 360 minutes (6 hours) per shift utilization is (6hrs/8hrs)*100 = 75% 5) How long will packing have to work on a day when bread making works at maximum capacity? Working at full capacity (100% utilization), bread making produces 8hrs*(60mins/hr)*(2.22 loaves/min )= 1,066.67 loaves Packing will then work 1,066.67 loaves /( 1.67loaves/min) = 640 mins or 10 hrs & 40 mins . 2) Find the maximum system output The constraint determines the system output. Therefore, assuming an 8-hour day, the maximum output will be 8 hrs*(60mins/hr)*(1.67loaves/min )= 800 loaves (or using the cycle time information for packing, simply 8hrs*100loaves/hr) 3) How many hours a day would you schedule for each process? Why? Assuming that demand exceed supply, we should set the constraint to work all available time (in this example, 8 hours). In 8 hours, the constraint will make 800 loaves. Bread making will then require 800 loaves /( 2.22 loaves/min) = 360 mins to make the same quantity. (More time at this step will translate into inventory) 6) Given the above, what is the maximum number of loaves waiting to be packed? Due to the difference in capacity between bread making and packing, loaves will continue to accumulate at an average rate of (2.22-1.67)=0.56loaves/min At the end of 8 hours (when bread making stops), there will be 0.56loaves/min*8hrs*(60mins/hr )= 266.67 loaves awaiting packing Alternatively, given the constant throughput rates, packing has to work 160 extra minutes per day (640-480), to process a total of 160mins*1.67loaves/min=266.67 loaves. Formulas: