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Process and Capacity Analysis

PGDM (2018-20): Term II


Introduction to Operations Management (OPM 201)

Sessions # 4 & 6

10/18/2018 Prof Kalyana C Chejarla


What is a Business Process?

1. A pragmatic definition
A Business Process describes how something is
done in an organization

In general terms…
Business - Organizational entity that deploys resources to provide
customers with desired products and services

Process (Merriam-Webster’s Dictionary)


(i) A natural phenomenon marked by gradual changes that
lead to a particular result
(ii) A natural continuing activity or function
(iii) A series of actions and operations conducing to an end

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


What is a Business Process? Cont’d
2. Traditional Process definition in OM
literature
A process specifies the transformation of inputs to outputs

Inputs Process Outputs

The transformation model of a process

Different types of transformations


• Physical (Ex. raw material  finished product)
• Locational (Ex. flying from Denver to L.A.)
• Transactional (Ex. depositing money in a bank)
• Informational (Ex. accounting data  financial
statement)

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


What is a Business Process? Cont’d

The Process View


 Any organization entity or business can be characterized as a
process or a network of processes
 Based on the simple transformation model of a process
 Has its origin in the areas of manufacturing and quality

Inputs Process Outputs

The transformation model of a process

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


What is a Business Process? Cont’d
3. A more comprehensive process definition
A business process is a network of connected activities and
buffers with well defined boundaries and precedence
relationships, which utilize resources to transform inputs into
outputs with the purpose of satisfying customer requirements

Resources

Process

Suppliers Inputs Outputs Customers

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Process Types and Hierarchies

1. Individual processes
– Carried out by a single individual

Make up

2. Vertical or Functional processes


– Contained within one functional unit or department

Make up

3. Horizontal or Cross Functional processes


– Spans several functional units, departments or
companies

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Process Types and Hierarchies
Illustration

CEO

Marketing Operations Accounting

Buying a TV
commercial

Order Request Production planning Order Fulfilled

Individual process Vertical process Horizontal process

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Process Types and Hierarchies
Core cross-functional processes often have highest improvement
potential
• Core processes – essential for meeting market place demand through a
specific strategy
• Especially high improvement potential if a significant amount of non-
manufacturing/service related activities
• Reasons
– Difficult to coordinate
– Have not kept up with improvements in manufacturing
– Difficult to detect waste and inefficiencies
– Often as little as 5% of the time considered adding customer value
– Customers more likely to abandon business because of “poor” service than
“poor” products

Examples:
PROCURE-TO-PAY
ORDER-TO-CASH
RECORD-TO-REPORT

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Components of the Process Architecture

Inputs and Outputs Information structure

Process
Flow units Architecture Resources

The network of activities


and buffers

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Components of the Process Architecture Cont’d

Inputs and Outputs


• Establish interaction between the process and its environment
• Identify the process boundaries  easy to identify the Input consumed
from the environment in order to produce the desired Output
• Process inputs and outputs can be
– Tangible (Ex. raw material, cash, products, customers)
– Intangible (Ex. Information, time, energy, services)
Flow units
• A flow unit is a transient entity or a job that proceeds through the network
of activities and buffers and exits the process as a finished output
• Typically, the identity of a flow unit changes across the process
• Examples of common flow units: materials, orders, files, documents,
customers, products, cash, transactions…
• Flow rate – The number of jobs flowing through the process per time unit

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Components of the Process Architecture Cont’d

The network of activities and buffers


• The work performed on a job moving through a process can be divided into
an ordered sequence of activities
• The buffers represent storage or waiting points where the job waits before
moving to the next activity (queues, waiting rooms, etc.)
• Different types of jobs  different paths through the network
• Defining activities is crucial in process analysis
– Tradeoff between process and activity complexity

Process Complexity

Individual Activity Complexity

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Components of the Process Architecture
Resources
• Tangible assets utilized to perform activities in a process
• Can be divided into:
 Capital assets – real estate, machinery, equipment, IT systems…
 Labor – people and their knowledge and skills
• Resources are utilized while inputs are consumed

Information structure
• Specifies the information required for making decisions and performing
activities in a process
• Limited information availability is a common cause for process
inefficiencies
– Information enables coordination!

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Process Flow Charting
• Design & Analysis of process begins with identification of
– activities that constitute the process
– time taken for each of the activity
– nature of flow of materials/information in the process.
• A pictorial representation of all these information could be
developed using process flow charting.
• Process flow charting employs a set of standard symbols and
graphical tools to represent all the information pertaining to
the process
• The symbols used are
– A step in the Process
– Transportation (Move)
– Storage or Inventory
– Decision

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Shirt Manufacturing Process Flow Chart

WIP
Inventory of Cloth
Inventory
& Other materials
Sleeves &
collar
Design stitching
Spreading Choice Cutting
Torso stitching

Assembly,
Pressing & buttons &
Inspection other
material

Inventory of
Shirts

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Buffering, Blocking, and Starving
• Buffer: A storage area between stages where the
output of a stage is placed prior to being used in
a downstream stage
• Bottleneck: Stage that limits the capacity of the
process
• Blocking: Occurs when the activities in a stage
must stop because there is no place to deposit
the item
• Starving: Occurs when the activities in a stage
must stop because there is no work

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Types of Processes
• One way to categorize a process is single-stage or multiple-stage
• Single-stage: all of the activities could be collapsed and analyzed
using a single cycle time to represent the speed of the process
• Multiple-stage: has multiple groups of activities that are linked
through flows
• Stage: multiple activities that have been pulled together for
analysis purposes

Multistage process
Stage 1  Stage 2  Stage 3

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Make-to-Stock (MTS) Vs Make-to-Order (MTO)

• Make-to-order
– Only activated in response to an actual order
– Both work-in-process and finished goods inventory
kept to a minimum
– Response time is slow
• Make-to-stock
– Process activated to meet expected or forecast demand
– Customer orders are served from target stocking level
• Hybrid
– Combines the features of both make-to-order and make-
to-stock

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Measuring Process Performance

In Lean Management terminology, Cycle time is also called as Takt Time in


PACED processes
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Toy Manufacturing - Process Analysis

Inspect &
Prepare Pre-treat Paint Dry
Pack
8 minutes 12 minutes 20 minutes 10 minutes
5 minutes

• 4 Toys per Pallet


• The flow time for the process is 55 minutes
• The spray painting is the bottleneck in the process
• Cycle time is 20 minutes. The implication of this is that when the process
operates in a continuous manner, a pallet of finished toys come out every 20
minutes.

10/18/2018 Prof Kalyana C Chejarla Mahadevan


A graphical representation with start and end times

Every batch of four toys come out exactly in an interval of 20 minutes which is the cycle time
for the process

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Production Capacity of the system

Inspect &
Prepare Pre-treat Paint Dry
Pack
7.5 pallets/hr 5 pallets/hr 3 pallets/hr 6 pallets/hr ??
12 pallets/hr

• The system can produce at the rate of 3 pallets per hour (12 toys)
• For a 8 hour operation the daily production is 24 pallets (96 toys)
• Capacity is unbalanced across different stages of the process

- What if Drying took more than 20 minutes? Would it become bottleneck?


- Why not?
- Therefore, it would be a mistake to identify the bottleneck only on the basis
of cycle time
10/18/2018 Prof Kalyana C Chejarla Mahadevan
Effect of Batch Size on Capacity

Given:
- Prepare stage ~ Break-up of 8 minutes
o Set-up (onetime) = 4 minutes and
o Pallet Loading time = 4 minutes
- The pre-treat and Inspect & Pack stages can accommodate only one batch at a
time
- The painting booth can hold up to 3 pallets during spraying
o Painting can happen for 1, 2 or 3 pallets at a time
- There are enough pallets in the system
- The only resource needed for drying is space, which is amply available

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Production Capacity under varying batch sizes
Existing Scenario: Batch Size of the Process = 1 pallet

Inspect &
Prepare Pre-treat Paint
Pack
(8 minutes) (12 minutes) (20 minutes) Dry
(5 minutes)
7.5 pallets/hr 5 pallets/hr 3 pallets/hr
12 pallets/hr

Scenario 1: Batch Size of the Process = 2 pallets

Prepare Inspect &


Pre-treat Paint
(4+ (2*4) = Pack
(12 minutes) (20 minutes) Dry
12 minutes) (5 minutes)
5 pallets/hr 6 pallets/hr
10 pallets/hr 12 pallets/hr
Scenario 2: Batch Size of the Process = 3 pallets

Prepare Inspect &


Pre-treat Paint
(4+ (3*4) = Pack
(12 minutes) (20 minutes) Dry
16 minutes) (5 minutes)
11.25 pallets/hr 5 pallets/hr 9 pallets/hr
12 pallets/hr

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Effect of Resource Availability on Capacity

Existing Scenario: Batch Size of the Process = 1 pallet, 1 painting booth

Inspect &
Prepare Pre-treat Paint
Pack
(8 minutes) (12 minutes) (20 minutes) Dry
(5 minutes)
7.5 pallets/hr 5 pallets/hr 3 pallets/hr
12 pallets/hr

Scenario 1: Batch Size of the Process = 3 pallets, 2 pre-treatment units

Pre-treat
(12 minutes)
Prepare 5 pallets/hr Inspect &
Paint
(4+ (3*4) = Pack
(20 minutes) Dry
16 minutes) (5 minutes)
11.25 pallets/hr Pre-treat 9 pallets/hr
12 pallets/hr
(12 minutes)
5 pallets/hr

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Process Analysis
Important Observations

• Batch sizes play a crucial role in


determining the bottleneck of a
process
• As several choices are made with
respect to the resources and batch
size bottleneck shifts from one stage
of the process to another. This is
referred to as wandering bottleneck.
• A process analysis exercise often
leads to the issue of improving the
process
• Utilization rates of non-bottlenecks
• Line Balancing
• Variability and its effect on WIP
build-up / resource utilization
• What goes in, must come out; else
overflows!!

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Bottlenecks
Causes and Ways to address
Causes
• Outdated Equipment
• Breakdowns
• Absent workers
• Bad forecasting
• …..

Ways to address
• Never leave it idle AND Reduce strain on bottleneck
• Manage WIP Limits AND consider batch processing
• Add more people / resources
• Minimising downtime, setup and changeover time
• Eliminating non-value activities
• ….

10/18/2018 Prof Kalyana C Chejarla Mahadevan


Flow Time Analysis

• The task of calculating the average flow time for an


entire process or process segment
– Assumes that the average activity times for all involved
activities are available
• In the simplest case a process consists of a sequence
of activities on a single path
– The average flow time is just the sum of the average activity
times involved
• … but in general we must be able to account for
– Rework
– Multiple paths
– Parallel activities

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Processes and Flows – Concepts
• A process = A set of activities that transforms inputs to
outputs
• Two main methods for processing jobs
1. Discrete – Identifiable products or services
 Examples: Cars, cell phones, clothes etc.
2. Continuous – Products and services not in identifiable distinct
units
 Examples: Gasoline, electricity, paper etc.
• Three main types of flow structures
1. Divergent – Several outputs derived from one input
 Example: Dairy and oil products
2. Convergent – Several inputs put together to one output
 Example: Car manufacturing, general assembly lines
3. Linear – One input gives one output
 Example: Hospital treatment

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Rework
• Many processes include control or inspection points
where if the job does not conform it will be sent back
for rework
– The rework will directly affect the average flow time!
• Definitions
– T = sum of activity times in the rework loop
– r = percentage of jobs requiring rework (rejection rate)
• Assuming a job is never reworked more than once
FT = (1+r)T

• Assuming a reworked job is no different than a


regular job FT = T/(1-r)

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Rework - Example
• Consider a process consisting of
– Three activities, A, B & C taking on average 10 min. each
– One inspection activity (I) taking 4 minutes to complete.
– X% of the jobs are rejected at inspection and sent for rework

A B C I
0.75
(10) (10) (10) (4)

0.25
 What is the average flow time?
a) If no jobs are rejected and sent for rework.
b) If 25% of the jobs need rework but never more than once.
c) If 25% of the jobs need rework but reworked jobs are no different in
quality than ordinary jobs.

a. Flow Time = FTA + FTB+ FTC + FTI = 10+ 10+ 10+ 4 = 34 Minutes
b. Flow Time = FTA + (1+r)* {FTB+ FTC + FTI} = 10+ 1.25*{10+ 10+ 4} = 40 Minutes
c. Flow Time = FTA + (FTB+ FTC + FTI}/(1-r) = 10+ {10+ 10+ 4}/(1-0.25) = 42 Minutes

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Multiple Paths

• It is common that there are alternative routes through


the process
– For example: jobs can be split in “fast track” and normal jobs

• Assume that m different paths originate from a


decision point
– pi = The probability that a job is routed to path i
– Ti = The time to go down path i

m
CT = p1T1+p2T2+…+pmTm=  pi Ti
i 1

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Multiple Paths - Example
• Consider a process segment consisting of 3 activities A, B
& C with activity times 10,15 & 20 minutes respectively
• On average 20% of the jobs are routed via B and 80% go
straight to activity C.

A 0.8 C
(10) (20)

0.2
B
(15)

 What is the average flow time?


Flow Time = FTA + PB*FTB+FTC
= 10 + 0.2*15 + 20
= 33 Minutes

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Processes with Parallel Activities
• If two activities related to the same job are done in parallel
the contribution to the cycle time for the job is the
maximum of the two activity times.
• Assuming
– M process segments in parallel
– Ti = Average process time for process segment i to be completed

FTparallel = Max{T1, T2,…, TM}

• Example: A students admission application in triplicate is


sent in parallel to Dean’s Office, Accounts Section &
Admissions committee for seeking inputs

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Parallel Activities - Example

• Consider a process segment with 5 activities A, B, C, D & E


with average activity times: 12, 14, 20, 18 & 15 minutes
B
(14)

A C E
(12) (20) (15)

D
(18)
 What is the average flow time for the process segment?
Flow Time = FTA + Max{FTB+FTC+FTD} + FTE
= 12 + 20 + 15
= 47 Minutes

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Process Analysis
Example
Wally’s Widget Warehouse takes orders from 7 AM to 7 PM. The manager wants to
analyze the process and has provided the following process diagram. There are three
steps required to ship a customer order. The first step is to take order from customer. The
second step is to pick the order for the customer, and then they have to pack the order
ready for shipping. Wally promises that every order placed today gets shipped
tomorrow. That means that the picking and packing operations must finish all orders
before they go home.

a. What is the current maximum output of the process assuming that no one works
overtime?
b. How long will the picking and packing operations have to work if we have a day
where the order taker works at his maximum capacity?
c. Given b, what is the maximum number of orders waiting to be picked?
d. Given b, what is the maximum number of orders waiting to be packed?
e. If we double to packing capacity (from 60 to 120 orders per hour), what impact does
this have on your answers in the parts b, c and d?
10/18/2018 Prof Kalyana C Chejarla
Process Analysis Cont’d
Example

Working Hours: 12
a. Maximum Output: Capacity of process* Working Hours = 60*12 = 720
Orders
b. Pick Order has to work for 1200/80= 15 Hours if order taker works at max
capacity and Pack order will take 1200/ 60= 20 Hours for the activity.
c. Orders accumulated before pick order is at rate of 20 per hour. Since orders
are taken for 12 hours; maximum number of orders waiting would be:
20*12= 240 Orders
d. Same as above
e. Bottleneck now is ‘Pick’ process
i. Order takers max capacity = 1200 units in a 12 hour shift.
ii. Picking will see inventory being built before it at the rate of 20 per hour for 12
hours (i.e, a max of 240 units) and then starts to slide down to zero in another
240/80 = 3 hours.
iii. There will not be any inventory build-up before ‘Pack’.

10/18/2018 Prof Kalyana C Chejarla


Common Components of Lead Time
Flow time in Operations + other NVA times

Lost Time
Actual (Scrap, Rework,
Operations Unnecessary Activities)
Time Moving Time

Between Processing Units, Waiting Time


People across Departments

Unclear Instructions, Missing Information, Approvals,


Authorizations,
Non-availability of Material & Components, Resources
Awaiting Approvals, Decisions
Time lost in coordination among chain of customers

10/18/2018 Prof Kalyana C Chejarla Mahadevan


1. LITTLE’S LAW
2. THEORY OF CONSTRAINTS

10/18/2018 Prof Kalyana C Chejarla


Process Throughput

• Inflow and Outflow rates typically vary


over time
– IN(t) = Arrival/Inflow rate of jobs at time t
– OUT(t) = Departure/Outflow rate of
finished jobs at time t
– IN = Average inflow rate over time
– OUT = Average outflow rate over time

• A stable system must have IN=OUT=


–  = the process flow rate
= process throughput

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Process Inflow and Outflow vary over time

12

10

8
IN(t)
Jobs

6
OUT(t)
4

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Work-In-Process
• All jobs that have entered the process but
not yet left it
• A long lasting trend in manufacturing
has been to lower WIP by reducing batch
sizes
– The JIT philosophy
– Forces reduction in set up times and set up
costs
• WIP = Average work in process over
time
• WIP(t) = Work in process at time t
– WIP(t) increases when IN(t)>OUT(t)
– WIP(t) decreases when IN(t)<OUT(t)

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Relationship between WIP and Inflow & Outflow
rates

OUT(t) = IN(t)
OUT(t) > IN(t)
WIP(t)

WIP

IN(t) > OUT(t)

t1 t2 t3

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Little’s Formula / Law
(Due to J.D.C. Little (1961))

• States a fundamental and very general relationship between the


average: WIP, Throughput Rate (= ) and Flow time (FT)
– The Flow time refers to the time the job spends in the system or
process (Analogous to a water pipe; FT=Length,  = bottleneck width & WIP = amount
of water at any given time in the pipe)

Little’s Formula: WIP = * FT

• Implications, everything else equal


– Shorter flow time lower WIP
– If  increases  to keep WIP at current levels FT must be reduced
• A related measure is (inventory) turnover ratio
– Indicates how often the WIP (& RM) is entirely replaced by a new set
of jobs
Turnover ratio = 1/FT

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Car Batteries
Little’s Law example

• Cost per battery = $45

• Time to make a car = 12 hours (Flow time)

• Assembles 200 cars per 8-hour shift


– Throughput Rate = 200/8 = 25 cars / hour (i.e, use 25
batteries per hour)

• Holds on average 8,000 batteries in raw material


inventory

10/18/2018 Prof Kalyana C Chejarla Chase


Car Batteries Cont’d
Little’s Law example

• WIP = Throughput Rate x Flow time = 25 batteries/ hour x 12

hours = 300 batteries

• Total Inventory = RM + WIP = 8,000 + 300 = 8,300 batteries


• Value = 8,300 x $45 = $373,500
• Flow time = Inventory/Throughput = 8,300/200 = 41.5 days

10/18/2018 Prof Kalyana C Chejarla Chase


Little’s Law in Process Analysis
• Material Flow: The Jumbo King restaurant processes an average of 5,000 Kg. of potato (for
vada-pav) per week. The typical inventory of raw potato is 2,500 kg. What is the average
vada-pav’s flow time of the restaurant?

λ (arrival rate) = 5000 Kg / Wk,


L (Length of queue) = 2500 Kg,
W (Flow time) = L/ λ = (2500 Kg) / (5000 Kg/Wk) = 0.5 week

• Customer Flow: The above restaurant processes on average 1,500 customers per day (15
hours). On average there are 75 customers in the restaurant (waiting to place the order,
waiting for the order to arrive, eating etc.). How long does an average customer spend at
the restaurant and what is the average customer turnover?

λ (arrival rate) = 1500 customers per day i.e. 100 customers per hour,
L (Length of queue) = 75 customers,
W (Flow time) = L/ λ = (75 customers)/(100 customers per hour) = ¾ hr

• Job Flow: Shamshabad branch office of the New India insurance company processes 10,000
claims per year. The average processing time is 3 weeks. Assuming 50 weeks in a year,
what is the average number of claims “in process”.
λ (arrival rate) = 10000 claims /year,
W (Flow time) = (3 weeks )/(50 weeks /year),
L (Length) = λ * W = (10000 claims per year)* (3/50 years) = 600 claims
Little’s Law in Process Analysis Cont’d

• Cash Flow: Z-Telekom sells Rs. 300 crores worth of cellular


equipment per year. The average accounts receivable in the cellular
group is Rs. 45 crores. What is the average billing to collection
process flow time?

λ (arrival rate) = 300 crores per year,


L (length) = 45 crores,
W (flow time) = L / λ = (45 crores) / (300 crores per year) = 0.15 year

• Question: A general manager at a pharmaceutical company states


that her inventory turns three times a year. She also states that
everything that the company buys gets processed and leaves the
docks within six weeks. Are these statements consistent?

Flow time = 1/3rd of the year = 17 weeks approx.


As against the later claim of 6 weeks of flow time. Hence, inconsistent.
Process Analysis
Another Example
Joe’s commercial Laundry has contracts to wash bed sheets for hotels. Joe
intakes each batch of sheets, which takes 1 minute, then the sheets are washed
taking 20 minutes and dried taking 30 minutes. The batch of sheets is ironed
taking 10 minutes for each batch and there are two employees ironing sheets.
Finally, Joe packages the sheets and bills the customer, taking two minutes. Joe
has five washing machines and seven dryers that can each process one batch of
sheets.
a. What is the capacity of the laundry system and what is the bottleneck?
b. What is the average flow time of a batch of sheets?
c. If the throughput rate is 10 batches per hour, what is the average number of batches of
sheets in the system (Inventory)?

Capacity (in terms of batches / hour) of Laundry System =Min {[60/3{Joe}], [(60/20)*5
{Washing}], [{(60/30)*7 {Drying}], [(60/10)*2{Ironing}]}

=Min {20, 15, 14, 12} = 12 Batches / Hour

Bottleneck= Ironing

Flow Time= 1+20+30+10+2 = 63min

WIP = Throughput rate* Flow time = {(10*63)/60}= 10.5 batches of sheets

10/18/2018 Prof Kalyana C Chejarla


Theory of Constraints (TOC)

• An approach for identifying and managing bottlenecks


– To increase process flow and thereby process efficiency
• TOC is focusing on improving the bottom line through
– Increasing throughput
– Reducing inventory
– Reducing operating costs
 Need operating policies that move the variables in the right
directions without violating the given constraints
• Three broad constraint categories
1. Resource constraints
2. Market constraints
3. Policy constraints

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


TOC Cont’d

• TOC Methodology
1. Identify the system’s constraints
2. Determine how to exploit the constraints
– Choose decision/ranking rules for processing jobs in
bottleneck
3. Subordinate everything to the decisions in step 2
4. Elevate the constraints to improve performance
– For example, increasing bottleneck capacity through
investments in new equipment or labor
5. If the current constraints are eliminated return to step 1
– Don’t loose momentum, continuous improvement is
necessary!

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Increasing Process Capacity
• Two fundamental ways of increasing process
capacity
1. Add resource capacity at the bottleneck
– Additional equipment, labor or overtime
– Automation
2. Reduce bottleneck workload
– Process redesign
 Shifting activities from the bottleneck to other
resources
 Reducing activity time for bottleneck jobs
• When the goal is to reduce cycle time and increase
capacity careful attention must be given to
– The resource availability
– The assignment of activities to resources

10/18/2018 Prof Kalyana C Chejarla Laguna & Marklund


Q & A / DISCUSSION

10/18/2018 Prof Kalyana C Chejarla

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