JIT vs. the Theory of Constraints
JIT versus the Theory of Constraints | AMB303 International Logistics | Theory of Constraints |
Name : Hui LuStudent Number: N8035636Date: 02/09/2012Word Count:1007 |
Contents
1.0 Definition……………………………..…………………….3
2.0 Discussion…………………………………………...……..3
2.1Core concept…………………………………..….3
2.2Five Steps of TOC………………………………..4
2.3 Evaluation………………………………………..4
2.3.1 Advantages…………………………...4
2.3.2 Disadvantages……………………...…4
2.4. Example……………………..…………………..5
3.0 Conclusion 6
4.0 Reference 7 1.0 Introduction
TOC is a management philosophy introduced by Dr. Eliyahu M. Goldratt in his 1984 book The Goal, which is geared to help organizations continually achieve their goal. Based upon the contention that any manageable system is limited in achieving more of its goal by a small number of constraints (that there is always at least one). The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps. 2.0 Discussion
2.1Core concept
The basic premise of TOC as applied to business is that improving any process is best done not by trying to maximize efficiency in every part of the process, but by focusing on the slowest part of the process, called the constraint. For instance, during the early days of the American Civil War, several units calling themselves legions were formed, consisting of combined infantry, artillery, and cavalry. This arrangement did not last because the entire unit could only maneuver as fast as the slowest part. So, the artillery was the constraint.
Throughput costing, sometimes called super-variable costing recognizes only direct materials costs as being truly variable and thus relevant to the calculation of throughput margin. All other manufacturing costs are ignored because they are considered fixed in the short run.
Throughput margin = Sales - Direct materials
2.2The Five Steps of TOC
The theory of constraints should be used as
Name : Hui LuStudent Number: N8035636Date: 02/09/2012Word Count:1007 |
Contents
1.0 Definition……………………………..…………………….3
2.0 Discussion…………………………………………...……..3
2.1Core concept…………………………………..….3
2.2Five Steps of TOC………………………………..4
2.3 Evaluation………………………………………..4
2.3.1 Advantages…………………………...4
2.3.2 Disadvantages……………………...…4
2.4. Example……………………..…………………..5
3.0 Conclusion 6
4.0 Reference 7 1.0 Introduction
TOC is a management philosophy introduced by Dr. Eliyahu M. Goldratt in his 1984 book The Goal, which is geared to help organizations continually achieve their goal. Based upon the contention that any manageable system is limited in achieving more of its goal by a small number of constraints (that there is always at least one). The TOC process seeks to identify the constraint and restructure the rest of the organization around it, through the use of the Five Focusing Steps. 2.0 Discussion
2.1Core concept
The basic premise of TOC as applied to business is that improving any process is best done not by trying to maximize efficiency in every part of the process, but by focusing on the slowest part of the process, called the constraint. For instance, during the early days of the American Civil War, several units calling themselves legions were formed, consisting of combined infantry, artillery, and cavalry. This arrangement did not last because the entire unit could only maneuver as fast as the slowest part. So, the artillery was the constraint.
Throughput costing, sometimes called super-variable costing recognizes only direct materials costs as being truly variable and thus relevant to the calculation of throughput margin. All other manufacturing costs are ignored because they are considered fixed in the short run.
Throughput margin = Sales - Direct materials
2.2The Five Steps of TOC
The theory of constraints should be used as