THEORY OF CONSTRAINTS PROF DR FILIP ROODHOOFT. © Vlerick Business School THEORY OF CONSTRAINTS Philosophy Optimise the performance by managing the bottlenecks.

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Presentation transcript:

THEORY OF CONSTRAINTS PROF DR FILIP ROODHOOFT

© Vlerick Business School THEORY OF CONSTRAINTS Philosophy Optimise the performance by managing the bottlenecks = short term decision Throughput contribution (sales – cost of materials) Investments Operational costs 2

© Vlerick Business School THEORY OF CONSTRAINTS Steps Analysis of productive capacity Optimal use of the bottleneck Planning of production in function of optimal use of the bottleneck Increase the capacity of the bottleneck by action A dynamic process of continuous improvement 3

© Vlerick Business School THEORY OF CONSTRAINTS Example: production of XX en XZ on machines A, B, C and D 4

© Vlerick Business School THEORY OF CONSTRAINTS Example (cont’d) 5

© Vlerick Business School THEORY OF CONSTRAINTS 1. Analysis of productive capacity Machine capacity = 4,800 minutes per week Occupation when entire demand is fulfilled 6 Machine B is a bottleneck

© Vlerick Business School THEORY OF CONSTRAINTS 2. Optimal use of the bottleneck Contribution per constraining factor or per bottleneck Give priority to product with highest contribution per constraining factor (type XX) 7

© Vlerick Business School THEORY OF CONSTRAINTS 3. Planning production in function of optimal use of the bottleneck Operating income for optimal use of machine B 8

© Vlerick Business School THEORY OF CONSTRAINTS 4. Increase the capacity of the bottleneck by action Machine continuously in operation: 1. Minimise set-up time, avoid machine defects, provide sufficient stock for machine B 2. Expand internally the capacity of machine B through investment in extra machine 3. Expand externally the capacity of machine B through outsourcing of parts of the production process 5. A dynamic process of continuous improvement Analysis of the new situation can contribute to new bottlenecks 9