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Constraint Management

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CONSTRAINT
Any factor that limits the performance of a system and restricts its output. Constraints can occur up or down the supply chain, with either the firms suppliers or customers, or within one of firms processes like service/product development or order fulfillment.

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KINDS OF CONSTRAINTS
 Three kinds of constraints can generally be identified:  Physical (usually machine, labor or workstation capacity or material shortages)  Market ( demand is less than capacity)  Managerial ( policy, metrics, or mind-sets that create constraints which impede work flow)

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BOTTLENECK
 A bottleneck is a special type of constraint that relates to:  The capacity shortage of a process, & is defined as  Any resource whose available capacity limits the organizations ability to meet the service or product volume, product mix, or fluctuating requirements demanded by the market place

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MANAGING CONSTRAINT ACROSS THE ORGANIZATION

 Firms must manage their constraints and make appropriate capacity choices at the individual-process level, as well as at the organization level.  Hence this process involves inter-functional cooperation  A bottleneck could be the sales department not getting enough sales or the loan department not processing loans fast enough as in many banks.  The constraint could be a lack of capital or equipment or it could be planning or scheduling
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THEORY OF CONSTRAINT
 A systematic management approach that focuses on actively managing those constraints that impede a firms progress toward its goals  TOC methods increase the firms profits more effectively by focusing on making materials flow rapidly through the entire system  They help firms look at the big picturehow processes can be improved to increase overall work flows, & how inventory and workforce levels can be reduced while still effectively utilizing critical resources.
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Theory of Constraints
 Bottlenecks can both be internal or external to the firm and are typically a process or step with the lowest capacity  Throughput time is the total elapsed time from the start to the finish of a job or a customer being processed at one or more work centers  A bottleneck can be identified in several different ways
1. If it has the highest total time per unit processed 2. If it has the highest average utilization and total workload 3. If a reduction of processing time would reduce the average throughput time for the entire process

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Identifying the Bottleneck

EXAMPLE 7.1 Managers at the First Community Bank are attempting to shorten the time it takes customers with approved loan applications to get their paperwork processed. The flowchart for this process, consisting of several different activities, each performed by a different bank employee, is shown in Figure. Approved loan applications first arrive at activity or step 1, where they are checked for completeness and put in order.

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At step 2, the loans are categorized into different classes according to the loan amount and whether they are being requested for personal or commercial reasons. While credit checking commences at step 3, loan application data are entered in parallel into the information system for record-keeping purposes at step 4. Finally, all paperwork for setting up the new loan is finished at step 5. The time taken in minutes is given in parentheses.

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Identifying the Bottleneck

Check for credit rating (15 min)

Check loan documents and put them in order (15 min)

Categorize loans (20 min)

Complete paperwork for new loan (10 min)

Enter loan application into the system (12 min) Figure: Processing Credit Loan Applications at First Community Bank

Which single step is the bottleneck? The management is also interested in knowing the maximum number of approved loans this system can process in a 5-hour work day.
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Identifying the Bottleneck

SOLUTION We define the bottleneck as step 2, where a single-minute reduction in its time reduces the average throughput time of the entire loan approval process. The throughput time to complete an approved loan application is 15 + 20 + max(15, 12) + 10 = 60 minutes. Although we assume no waiting time in front of any step, in practice such a smooth process flow is not always the case. So the actual time taken for completing an approved loan will be longer than 60 minutes due to non uniform arrival of applications, variations in actual processing times, and the related factors. The capacity for loan completions is derived by translating the minutes per customer at the bottleneck step to customer per hour. At First Community Bank, it is 3 customers per hour because the bottleneck step 2 can process only 1 customer every 20 minutes (60/3).

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A Line Process
 Line Balancing


Assignment of work to stations in a line so as to achieve the desired output rate with the smallest number of workstations Achieving the goal is similar to the theory of constraints but it differs in how it addresses bottlenecks

 Precedence diagram AON network

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Precedence Diagram
EXAMPLE Green Grass, Inc., a manufacturer of lawn and garden equipment, is designing an assembly line to produce a new fertilizer spreader, the Big Broadcaster. Using the following information on the production process, construct a precedence diagram for the Work Time Immediate Description (sec) Predecessor(s) Big Broadcaster. Element
A B C D E F G H I Bolt leg frame to hopper Insert impeller shaft Attach axle Attach agitator Attach drive wheel Attach free wheel Mount lower post Attach controls Mount nameplate 40 30 50 40 6 25 15 20 18 Total =244
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None A A B B C C D, E F, G

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Precedence Diagram
SOLUTION Figure shows the complete diagram. We begin with work element A, which has no immediate predecessors. Next, we add elements B and C, for which element A is the only immediate predecessor. After entering time standards and arrows showing precedence, we add elements D and E, and so on. The diagram simplifies interpretation. Work element F, D for example, can be done H 40 B anywhere on the line after 20 E element C is completed. 30 However, element I must 6 A await completion of F 40 elements F and G. C 25
50 G Figure: Precedence Diagram for Assembling the Big Broadcaster 15
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I 18

CONSTRAINT MANAGEMENT

CYCLE TIME
 Cycle time is the maximum time allowed for work on a unit at each station.

1 c= r where c = cycle time in hours r = desired output rate

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THEORETICAL MINIMUM
 A benchmark or goal for the smallest number of stations possible, where the total time required to assemble each unit is divided by the cycle time.
7t TM = c where 7t = total time required to assemble each unit

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 Idle time, efficiency, and balance delay

Idle time = nc 7t where n = number of stations 7t Efficiency (%) = nc (100) Balance delay (%) = 100 Efficiency

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Calculating Cycle Time, TM, Efficiency

EXAMPLE Green Grasss plant manager just received marketings latest forecasts of Big Broadcaster sales for the next year. She wants its production line to be designed to make 2,400 spreaders per week for at least the next 3 months. The plant will operate 40 hours per week. a. What should be the lines cycle time? b. What is the smallest number of workstations that she could hope for in designing the line for this cycle time? c. Suppose that she finds a solution that requires only five stations. What would be the lines efficiency?

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Calculating Cycle Time, TM, Efficiency

SOLUTION a. First convert the desired output rate (2,400 units per week) to an hourly rate by dividing the weekly output rate by 40 hours per week to get units per hour. Then the cycle time is c = 1/r = 1/60 (hr/unit) = 1 minute/unit = 60 seconds/unit b. Now calculate the theoretical minimum for the number of stations by dividing the total time, 7t, by the cycle time, c = 60 seconds. Assuming perfect balance, we have 7t 244 seconds = = 4.067 or 5 stations TM = c 60 seconds

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Calculating Cycle Time, TM, Efficiency

c. Now calculate the efficiency of a five-station solution, assuming for now that one can be found:

7t 244 Efficiency = (100) = = 81.3% nc 5(60)

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 The theoretical minimum number of workstations is 5 and the cycle time is 60 seconds, so Figure 7.5 represents an optimal solution to the problem
D B 30 A 40 C 50 G 15 Figure 7.5 Big Broadcaster Precedence Diagram Solution
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40 E 6

H 20

F 25 I 18

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Solved Problem
A company is setting up an assembly line to produce 192 units per 8-hour shift. The following table identifies the work elements, times, and immediate predecessors:
Work Element A B C D E F G H I J Time (sec) 40 80 30 25 20 15 120 145 130 115 Total 720 Immediate Predecessor(s) None A D, E, F B B B A G H C, I

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a. What is the desired cycle time (in seconds)? b. What is the theoretical minimum number of stations? c. Use trial and error to work out a solution, and show your solution on a precedence diagram. d. What are the efficiency and balance delay of the solution found? SOLUTION a. Substituting in the cycle-time formula, we get 1 8 hours (3,600 sec/hr) = 150 sec/unit c= r = 192 units

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b. The sum of the work-element times is 720 seconds, so

7t TM = c =

720 sec/unit 150 sec/unit-station

= 4.8

or 5 stations

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c. The precedence diagram is shown in Figure. Each row in the following table shows work elements assigned to each of the five workstations in the proposed solution.
Work Element Immediate Predecessor(s) None A D, E, F B B B A G H C, I

D 25 B 80 A 40 G 120 H 145 Figure Precedence Diagram

CONSTRAINT MANAGEMENT

A B C D E F G H I J

E 20 F 15

C 30 J 115

I 130

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D 25 B 80 A 40 G 120 H 145 E 20 F 15 I 130 C 30 J 115

Station S1

Candidate(s)

Choice

Work-Element Time (sec)

Cumulative Time (sec)

Idle Time (c= 150 sec)

S2

S3 S4

S5

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D 25 B 80 A 40 G 120 H 145 E 20 F 15 I 130 C 30 J 115

Station S1

Candidate(s) A B D, E, F

Choice A B D G E H I F C J

Work-Element Time (sec) 40 80 25 120 20 145 130 15 30 115

Cumulative Time (sec) 40 120 145 120 140 145 130 145 30 145

Idle Time (c= 150 sec) 110 30 5 30 10 5 20 5 120 5

S2

E, F, G E, F

S3 S4

F, H F, I F

S5

C J

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Solved Problem
d. Calculating the efficiency, we get

Efficiency (%) =

7t 720 sec/unit nc (100) = 5(150 sec/unit)

= 96% Thus, the balance delay is only 4 percent (10096).

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