Goldratt's Theory of Constraints

A. 9 OPT principles (optimized production technology)

  1. Balance flow, not capacity.
  2. Utilization of a non-bottleneck is determined by some other constraint in the system, not by its own potential.
  3. Utilization and activation are not synonymous a. utilization refers to running the resource in accordance with the rate at the bottleneck. b. activation is running the machine whether it is contributing to throughput or not.
  4. An hour lost at a bottleneck is an hour lost for the entire system.
  5. An hour saved at a non-bottleneck is a mirage. (just adds to excess capacity)
  6. Bottlenecks govern both throughput and inventory.
  7. The transfer batch size may not, and many times should not be equal to the process batch size.
  8. The process batch should be variable, not fixed.
  9. Schedules should be established by looking at all the constraints simultaneously. Lead times are a function of the schedule, do not assume they are fixed.

B. OPT scheduling procedure - 3 steps

  1. Identify the bottlenecks
  2. Schedule and operate to see that the bottlenecks are fully utilized.
  3. Schedule the non-bottleneck operations to keep bottlenecks supplied and yet hold WIP inventory low.

-OPT is a computer program similar to MRP used to schedule operations and control inventory. It seems to be especially useful when product mix and level of demand vary considerably.

C. Theory of Constraints