UT Knoxville BUAD 341 - Applications of the Theory of Constraints (4 pages)

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Applications of the Theory of Constraints



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Applications of the Theory of Constraints

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This lecture was an example of the application of the Theory of Contraints. To help understand TOC better.


Lecture number:
5
Pages:
4
Type:
Lecture Note
School:
University of Tennessee
Course:
Buad 341 - CBM II: Lean Operations
Edition:
1

Unformatted text preview:

BA 341 5th Edition Lecture 5 Outline of Last Lecture I Steps of the Theory of Constraints II Goldratt s scheduling rules III Measurements Outline of Current Lecture IV Objectives V Throughput Perspective VI Continuing with the Process VII Cost World Approach Current Lecture Application of the Theory of Constraints P Q Exercise Objectives Understanding the role played by the Theory of Constraints in decision making Which products to make New equipment necessary How should we price our products These questions aren t only about finding constraints this process can be applied to other things Which products should we produce Goldratt s P Q example The Haystack Syndrome Goldratt 1991 A process can produce 2 products P and Q P Process Time 10 D 10 15 C A 5 10 C B Q 5 5 10 C B D 25 10 B A 20 20 GradeBuddy 25 is best These notes 5 represent a 20 detailed interpretation of the professor s lecture used as a supplement to your own notes not as a substitute Component P3 P 1 P2 Q1 Q2 Component Cost Cost and Demand Info Raw materials sum of P3 P1 P2 P Q require processing on four machines processing time minutes per product are Each machine runs 2400 mins week fixed costs 4000 week Decision Analysis Goal maximize our profit Decision output How many units of P and Q should we make Model Inputs Costs of components of P and Q machining times for components sales price of P and Q maximum machine time available etc Using the Throughput Perspective Step 1 can we make 110 units of P and all 60 units of Q o Ex Time needed on machine A o 110 units of P x 15 min unit 60 units of Q x 10 min unit 2250 min o Cannot satisfy demand for both products because Machine B is over 2 400 minutes Step 2 Exploit the constraint o Which product generates the most throughput on the bottleneck machine Why Product Q 55 per unit 35 mins 1 57 min Product P 45 per unit 10 mins 4 50 min o Which product is most profitable to produce Answer P generates the highest profit per unit of time on the bottleneck machine



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