Goldratt’ s Rules of Production Scheduling
Do not balance capacity balance the flow
The level of utilization of a nonbottleneck resource is not determined by its own potential but by some other constraint in the system
Utilization and activation of a resource are not the same
An hour lost at a bottleneck is an hour lost for the entire system
An hour saved at a nonbottleneck is a mirage
Goldratt’ s Rules of Production Scheduling (Continued)
Bottlenecks govern both throughput and inventory in the system
Transfer batch may not and many times should not be equal to the process batch
A process batch should be variable both along its route and in time
Priorities can be set only by examining the system’ s constraints and lead time is a derivative of the schedule
Goldratt’ s Theory of Constraints (TOC)
Identify the system constraints
Decide how to exploit the system constraints
Subordinate everything else to that decision
Elevate the system constraints
If, in the previous steps, the constraints have been broken, go back to Step 1, but do not let inertia become the system constraint
Goldratt’ s Goal of the Firm
Performance Measurement: Financial
Net profit
an absolute measurement in dollars
Return on investment
a relative measure based on investment
Cash flow
a survival measurement
Performance Measurement: Operational
1. Throughput
the rate at which money is generated by the system through sales
2. Inventory
all the money that the system has invested in purchasing things it intends to sell
3. Operating expenses
all the money that the system spends to turn inventory into throughput
Does not guarantee profitability
Has throughput increased?
Has inventory decreased?
Have operational expenses decreased?
Unbalanced Capacity
Earlier we discussed balancing assembly lines
The goal was a constant cycle time across all stations

Synchronous manufacturing views constant workstation capacity as a bad decision
Capacity Related Terminology
Capacity is the available time for production
Bottleneck is what happens if capacity is less than demand placed on resource
Nonbottleneck is what happens when capacity is greater than demand placed on resource
Capacity-constrained resource (CCR) is a resource where the capacity is close to demand placed on the resource
Time Components of Production Cycle
Setup time is the time that a part spends waiting for a resource to be set up to work on this same part
Process time is the time that the part is being processed
Queue time is the time that a part waits for a resource while the resource is busy with something else
Time Components of Production Cycle (Continued)
Wait time is the time that a part waits not for a resource but for another part so that they can be assembled together

Idle time is the unused time that represents the cycle time less the sum of the setup time, processing time, queue time, and wait time
Saving Time
Drum, Buffer, Rope

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