Chapter 18

CHAPTER 18
SYNCHRONOUS MANUFACTURING AND THEORY OF
CONSTRIANTS
Review and Discussion ues!ions
1. State the global performance measurements and operational performance measurements and
briefly define each of them. How do these differ from traditional accounting measurements?
Global performance measurement:
Net profitmeasurement in dollars
!eturn on in"estmentgenerally a percent of the in"estment
Cash flowthe amount of cash a"ailable for day to day operations. #rom an accounting
standpoint$ deductions such as for depreciation are added bac% in since depreciation is not
really money spent
&perational measurement:
'hroughputthe actual rate of sales generated by the system
(n"entoryall the money in"ested in things that are intended to be sold. 'his includes
raw materials$ e)uipment$ etc.$ but at the cost price$ less any depreciation *which is
operating e+pense,.
&perating e+pensemoney spent to con"ert in"entory into throughput. 'his includes
direct and indirect labor$ materials$ depreciation$ administrati"e costs$ etc.
'raditional accounting methods wor% with such things as standard costs$ allocation of
burdens *which may consist of indirect labor$ administrati"e costs$ insurance$ ta+es$
depreciation$ etc.,$ and gross profits$ net profits$ cost centers$ profit centers$ all of which may
be based on standards and allocations. 'hese may not ha"e any basis in reality.
-any e+amples can be cited where traditional accounting forces wrong decisions. &ne
specific e+ample that one of the authors has confronted is of a .. /. of manufacturing who is
terminating a "ery profitable product line$ because on paper this product line is losing money.
0hy? 1ecause o"erhead is allocated based on the amount of direct labor and this product
line is almost all2direct labor$ with "ery little e)uipment in"ol"ed. His allocation of e"eryone
else3s burden creates a paper loss. 4nder these circumstances he would lose his annual bonus
and be rated down in his performance.
&ther areas of accounting differences: in"entory in traditional accounting is carried the same
as cost of goods sold$ i.e.$ with all the labor and burdens included. (n operational
measurement3s terminology$ in"entory is carried as the cost of the raw materials.
8
Chapter 18
5. 6iscuss process batch and transfer batches. How might you determine what the si7es should
be?
/rocess batch si7e is the total number of units that are scheduled to be processed within the
same setup. 8arger process batches in"ol"e fewer setups and$ therefore$ ha"e more output.
'he re"erse is true for smaller process batches.
'ransfer batches refers to the mo"ement of part of the process batch$ rather than waiting for
the entire 9ob to be completed. : process batch of 1;;;$ for e+ample$ can be transferred in
ten batches of 1;; each.
/rocess batch and transfer batch si7es can be controlled from a bottlenec% or capacity
constrained resource.
<. Compare and contrast =('$ -!/$ and synchroni7ed manufacturing$ stating their main features$
such as where each is or might be used$ amounts of raw materials and wor%2in2process
in"entories$ production lead times and cycle times$ and methods for control.
>uestion =(' -!/
Synchroni7ed
-anufacturing
0here used Continuous flow$
ma%e2to2stoc%
=ob shop$ custom
shop
=ob shop$ custom
shop
0(/ .ery low .ery high low
/roduction cycle time .ery short .ery long Short
Schedule fle+ibility 8e"el production for
min. of <; days
-!/ fro7en for <;
days$ but "ariable in
wor% centers
Can be changed daily
as needed
!egard for capacity
limits
High. 'ries to
balance capacity
'errible. -ay start
off o.%.$ but )uic%ly
becomes inaccurate
(s founded on
capacity limitations
8abor s%ills -ulti2s%illed to help
out other areas
Speciali7ed in own
wor% area
Same as -!/
?. Compare the importance and rele"ance of )uality control in =('$ -!/$ and synchronous
manufacturing.
>uality control is e+tremely important at each wor%station in =('$ =(' cannot tolerate poor
)uality since the result is loss of throughput. 'herefore$ each wor%er or wor%station is
responsible for ensuring that only high )uality wor% passes through.
>uality control in -!/ is somewhat hapha7ardly applied. 6efects can occur anywhere and
full responsibility for )uality does not lie within each wor%station. (nspection points are
placed within the system$ generally with the placement decided by the algorithm @when the
e+pected cost of bad )uality output e+ceeds the cost of inspection$ we will place an inspection
point there.A
>uality control in synchronous manufacturing is specifically decided based on importance.
#irst$ a bottlenec% or CC! is identified as the constraint of the system. 'his critical resource
B
Synchronous -anufacturing and 'heory of Constraints
will then be guaranteed that it will not waste time wor%ing on bad parts since inspection will
be done on its incoming side. #low after this bottlenec% should not be interrupted or
scrapped. 'herefore$ all parts that 9oin into this product after the bottlenec% will ha"e passed
inspection. :lso$ all processing after the bottlenec% will be of high )uality so that scrap will
not be created. (n summary$ inspect before the 1N$ and inspect all parts entering the flow
after the 1NC also perform high )uality wor% at all stations after the 1N
D. 6iscuss what is meant by forward loading and bac%ward loading.
#orward loading is similar to pro9ect scheduling. 'as%s are scheduled from some pint into the
future. 0hen resources are limited$ tas%s are assigned until capacity is reached and then
carried forward to the ne+t period.
1ac%ward loading is the -!/ type scheduling$ where the finished product or re)uired part is
needed. #rom that future point$ a schedule is created bac% to the present$ allowing for
processing and lead time re)uirements at each step of the way.
E. 6efine and e+plain the cause or causes of a mo"ing bottlenec%.
Generally$ a mo"ing bottlenec% is caused by batch si7es that are too large. 0hat happens is
that a large batch scheduled on a machine or resource which2on the a"erage has e+cess
capacity2pre"ents other products from being completed that also need the same resource.
'his interrupts the flow and star"es downstream resources. #rom their perspecti"e loo%ing
upstream$ they see that particular resource as the bottlenec%. Howe"er$ days or wee%s later$
because of the product mi+$ this apparent bottlenec% will disappear. :nother large batch si7e
somewhere else in the system will appear which does the same thing$ i.e.$ star"es downstream
operations.
F. G+plain how a nonbottlenec% can become a bottlenec%.
: non2bottlenec% can become a bottlenec% when it is scheduled with a batch si7e that is too
large. #or e+ample$ assume that machine 1 pro"ides wor% to machine 5 and machine <. Say
that machine 1 wor%s F hours out of each 8 hours and so is not a bottlenec%. Suppose$
howe"er$ that someone decides to sa"e some setup time by scheduling wor% on machine 1 in
much larger batches2say 5; hours for machine 5 and 1D hours for machine < *D times larger
batch si7es,.
-achine < will be star"ed for wor% since it will be dealing with a ?; hour cycle rather than an
8 hour cycle$ and will ha"e to wait until machine 1 produces the parts which it needs. 'hus$
from machine <3s point of "iew$ machine 1 has become a bottlenec%.
8. 0hat are the functions of in"entory in -!/$ =('$ and synchronous manufacturing
scheduling?
-!/ assumes 0(/ in"entories and times the production of these in"entories to coincide with
the preplanned deli"ery dates. 'he costs of in"entories are computed based on carrying costs.
(n"entories are seen as necessary. -!/ systems allow for economic order )uantities$ buffer
stoc%s$ and safety stoc%s. (n -!/ systems$ in"entories are pushed through the producti"e
processes. =ust2in2time$ on the other hand$ sees in"entories as wasteful. -eans are sought by
which in"entories can be reduced or eliminated. Constant attention is gi"en to the reduction
of unnecessary in"entories. 'his creates a producti"e system where stability is important and
1;
Chapter 18
)uality must be assured. Synchronous manufacturing treats in"entory as a loan gi"en to the
manufacturing unit. (n"entories are measured by raw materials cost. 1uffer in"entories are
utili7ed to assure throughput. &"erall$ synchronous manufacturing discourages in"entory if it
ser"es no purpose. (n"entory is measured in terms of dollar days with the goal of minimi7ing
dollar days.
B. 6efine process batch and transfer batch and their meaning in each of these applications: -!/$
=(' and bottlenec% or constrained resource logic.
(n an assembly line$ process batch refers to the batch si7e associated with a production
process. 'heoretically$ this batch si7e can be infinite. 'he transfer batch refers to the number
of parts produced in a se)uence. 'his may be as small as one. (n -!/$ process batch refers
to the o"erall output of production process while transfer batch would be e)ual to the
calculated re)uirements for a gi"en time buc%et. (n =('$ the transfer batch si7e is preferably
one. /rocess batches are infinite$ as fle+ible production lines are capable of producing an
entire product family with minimal setups. /rocess batch might be synonymous with the
daily production )uotas. (n synchronous manufacturing$ a process batch is of a si7e large
enough to be processed in a particular length of time. 'ransfer batches refer to the mo"ement
of part of the process batch. 'his allows parts to be mo"ed to succeeding wor%stations in the
process. : transfer batch can be e)ual in si7e to a process batch but not larger.
1;. 6iscuss how a production system is scheduled using -!/ logic$ =(' logic$ and synchronous
manufacturing logic.
(n -!/$ production is scheduled based on lead time re)uirements for a particular part of
subassembly. /roduction dates for components are calculated based on lead times offset from
deli"ery due dates. (n =('$ production is controlled using a %anban or @"isual record.A 0hen
wor% is completed at a downstream station$ a mo"e %anban is released and materials are
transferred from the upstream station. 6aily production schedules are determined based on a
daily production )uota. Smooth production schedules are sought to minimi7e disruptions to
operations. (n synchronous manufacturing$ the production flows are controlled by the drum.
'he drum regulates the flow of materials throughout the entire system.
11. 6iscuss the concept of @drum2buffer2rope.A
'he drum is a bottlenec%. (t is referred to as the drum because it stri%es the beat that the rest
of the system uses to function. 'he buffer is in"entory that is pro"ided *typically prior to the
drum, to ma%e sure that the drum always has something to do. 1uffers are also used to ma%e
sure that throughput is maintained throughout the production system. 'he rope is upstream
communication from the bottlenec% so that prior wor%stations only produce the materials
needed by the drum. 'his %eeps 0(/ in"entories from building up.
15. #rom the standpoint of the scheduling process$ how are resource limitations treated in an
-!/ application and how are they treated in a synchronous manufacturing application?
0ith -!/$ re)uirements are e+ploded using -!/ logic. /lanned order release schedules are
calculated by the system. Capacity re)uirements planning *C!/, pro"ides feasibility chec%
of these schedules. C!/ matches planned production with actual capacity to ensure that
schedules can be met$ synchronous manufacturing paces the entire production process by the
bottlenec%s. 'herefore$ if additional *less, capacity is needed$ capacity is added *restricted, at
11
Synchronous -anufacturing and 'heory of Constraints
the bottlenec%s. (n this way the flow is controlled at each bottlenec% or CC! to bring the
capacities in line.
1<. 0hat are operations people3s primary complaints against the accounting procedures used in
most firms? G+plain how such procedures can cause poor decisions for the total company.
'he primary complaints against accounting departments ha"e to do with the fact that
accounting systems measure the wrong things$ are infle+ible and reward counterproducti"e or
dysfunctional beha"ior. :ccounting systems conform to rigid guidelines established by
G::/. :s such$ accounting data are often not useful for accomplishing the superordinate
goals of the firm. :n e+ample is machine utili7ation. -achine utili7ation measures the
proportion of time that a machine is in use. (n an accounting sense$ high machine utili7ation
is preferable because it means that the in"estment in the machine is producing a return. #rom
an operations point of "iew$ this beha"ior results in high 0(/ in"entory. :nother e+ample is
)uality. 'he generally accepted accounting definition of )uality is that of conformance.
Howe"er$ manufacturing may desire to adopt a definition of )uality that considers customer
needs. :ccounting would be unable to accept the latter definition as it is more difficult to
)uantify. 'he two alternati"e definitions of )uality will reward different beha"ior within the
firm.
1?. -ost manufacturing firms try to balance capacity for their production se)uences. Some
belie"e that this is an in"alid strategy. G+plain why balancing capacity does not wor%.
(n synchronous manufacturing$ balancing all capacities is "iewed as a bad decision. (f
capacity is truly balanced$ completion deadlines may not be met due to "ariability in
processing times. : better strategy is to balance the flow of product through the system.
1D. 6iscuss why 'ransfer batches and process batches many times may not and should not be
e)ual.
'ransfer batches may be e)ual to or smaller in si7e than process batches. !ather than wait for
an entire batch to be finished$ it may be preferable to release part of a batch to the ne+t
downstream wor%station so that smooth product flow can be maintained. 'his will also result
in lower le"els of 0(/ in"entory.
15
Chapter 18
P"o#$e%s
/roblem
'ype of /roblem
6ifficulty
New
/roblem
-odified
/roblem
Chec%
#igure in
:ppendi+
:
1ottlenec%
analysis
/lacement
of buffers$
inspections$
etc.
/roduct
mi+
Company
type
1 Hes Gasy Hes
5 Hes -oderate
< Hes -oderate
? Hes -oderate
D Hes Gasy
E Hes -oderate
F Hes -oderate
8 Hes Hes -oderate Hes
1. 'he goal of a firm in operational measurements is to increase throughput while reducing
in"entory and operational e+penses. (n these cases$ the throughputs are limited by the
bottlenec%. 0e should a"oid the o"eruse of nonbottlenec% resources$ resulting in e+cess
in"entories.
Case (:
X Y Market
I: *1?;; +?;,JE; K B<<.<< hours$ I used 1;;L
H: *1?;;+<;,JE; K F;; hours$ H used FDL
Case ((:
Y X Market
H: *1?;;+<;,JE; K F;; hours$ H used FDL or wor% in process will build up.
I: *1?;; +?;,JE; K B<<.<< hours$ I used 1;;L
1<
Synchronous -anufacturing and 'heory of Constraints
Case (((:
Y X
Market
Assembly
I K B<<.<< hour$ H is used F;; hours or FDL or spare parts will accumulate at assembly.
Case (.:
Y X
Market Market
I is used for B<<.<< hours$ and H is used for F;; hours or finished goods in"entory will
build up for H.
1?
Chapter 18
Case &utcome with no restrictions
( No problems
(( G+cess 0(/ for H
((( G+cess of spare parts for H
(. G+cess finished goods for H
5.
A B C
Market
X
X
Buffer Buffer
Buffer
Buffer
Buffer
Drum
Drum
1D
Synchronous -anufacturing and 'heory of Constraints
<.
Market
Final
Assembly
X
Buffer
Buffer
Buffer
Buffer
Inspection
High
Quality
High
Quality
High
Quality
High
Quality
High
Quality
Inspection
Inspection
1E
Chapter 18
?.
O

!
D
C
B
I
H
"
#
M
$
%
&
A
F
Buffer
Buffer
Buffer
Inspection
High
Quality
High
Quality
High
Quality
High
Quality
High
Quality
Inspection
Bottleneck
CC'
High
Quality
Inspection
1F
Synchronous -anufacturing and 'heory of Constraints
D.
rocessing time
rocessing time
rocessing time
rocessing time
rocessing time
)etup time
)etup time I*le time
)etup time
)etup time
)etup time
I*le time
I*le time
I*le
time
Bottleneck
#onbottleneck
#onbottleneck
#onbottleneck
CC'
E. a. /roduct C has the highest selling priceC therefore$ sell only product C.
b.
/roduct /rice per unit Cost per unit Gross profit per unit
: MD; M?; M1;
1 ME; M?D M1D
C MF; ME; M1;
'he answer is to sell only 1 with the highest gross profit of M1D.
c.
/roduct
8imiting wor%
center
/rocessing
time *minutes,
&utput per
hour
/rofit per
unit /rofit per hour
: H < 5; M1; M5;;
1 I E 1; M1D M1D;
C 0 D 15 M1; M15;
'he answer is to sell only :$ with the highest profit per hour.
Note: this can be sol"ed as an 8/ problem. 'he best solution may "ery well be a
combination of products rather than a single product.
18
Chapter 18
F. 1ecause of the arrangement gi"en in the diagram$ the 0illard 8oc% Company plant will
e+hibit the following characteristics:
'wo distincti"e process and flows *fabrication and assembly,.
6ue date performance is "ery poorC either "ery early or "ery late.
&"ertime and e+pediting in fabrication are random and fre)uent.
: "ery high commonality of parts e+ists.
'he assignment of parts to orders occurs "ery late in the production process.
#abrication is in huge batches.
'he reasons for the problems are probably as follows:
(mpro"ement in due date performance is attempted through hea"y reliance on
in"entory.
'he dri"e to attain efficiencies and dollar shipped:
4ndermines assembly acti"ity ob9ecti"es of due date performance and assemble
to order.
4ndermines fabrication acti"ity ob9ecti"e of purchase and fabricate to forecast.
Causes intentional misallocation of parts and cannibali7ation at assembly and
subassembly areas.
'he core problem in the 0illard 8oc% Case is that due date performance is poor and deli"ery
lead times are )uite long.
'he following actions are recommended:
Control the flow of product through the fabrication portion of the process.
!educe batch si7es to eliminate wa"eli%e motion.
Stop the stealing of parts and components at subassembly.
1B
Synchronous -anufacturing and 'heory of Constraints
8. a. 6etermine the constraint *bottlenec%,. 'he demand on each machine is
-achine
Calculation of demand
6emand
4tili7ation
*5$?;; minutes per
wee%,
: 1;; - units at 5; minutes each K 5$;;; minutes 5$;;; minutes 8<L
1
1;; - units at 1D min. each K 1$D;; minutes
D; N units at <; min. each K 1$D;; minutes <$;;; minutes 15DL
C
1;; - units at 1D minutes each K 1$D;; minutes
D; N at 1D minutes each K FD; minutes 5$5D; minutes B?L
b. 6etermine the product mi+. 'his can best be done by calculating the throughput per
minute:
/roduct - /roduct N
Selling price M1B; M5;;
!aw material M1;; M 8;
Gross profit M B; M15;
/rocessing time2machine 1 1D minutes <; minutes
Gross profit per minute ME per minute M? per minute
'herefore$ the best product mi+ is to ma%e all 1;; of product - and as many of product
N as possible. 'o determine the number of N to produce$ e+amine the remaining capacity
on -achine 1.
:"ailable capacity *wee%, 5$?;; minutes
1;; units of - at 1D minutes per unit 1$D;; minutes
!emaining capacity B;; minutes
Gach N re)uires <; minutes per unit of -achine 1 B;; J <; K <; units of N
c. 0ee%ly profit of plant:
/roduct - /roduct N 'otal
0ee%ly production 1;; <;
Gross profit per unit MB; M15;
Gross /rofit MB$;;; M<$E;; M15$E;;
&perating e+penses M15$;;;
Net /rofit M E;;
Note: 'his problem could also be sol"ed using linear programming. (t will produce the
same answer as abo"e. 'he formulation is as follows:
8et: - K wee%ly production of product -
N K wee%ly production of product N
-a+imi7e: B;- N 15;N
5;- O 5?;; -achine : capacity
1D- N <;N O 5?;; -achine 1 capacity
1D- N 1DN O 5?;; -achine C capacity
- O 1;; - 6emand limitation
N O D; N 6emand limitation
-$N P ; Non2negati"ity
5;