THEORY OF

CONSTRAINTS.
BY:
GAGANDEEP KOUR
ROLL NO:41/06
C-101
 BIBLIOGRAPHY:
 International Journal of management and
Organizational behaviour,Vol.8(6),page 540-558.

 Goldratt, Eli, ”THE GOAL”

 Some important internet sources:

 http://www.goldratt.com/
 http://www.rogo.com/cac/
 http://www.wikipedia.com/
 http://www.goldatt.com/AGI offices.html
 WHAT IS A CONSTRAINT?
A constraint is anything that limits an
organization from achieving its goal.

 Two basic types of constraints:

 Physical constraint.
 Non-physical constraint.
 SOME CONSTRAINTS ARE:
 INACCURATE FORECASTS.
 CLIENTS CHANGED THEIR MINDS.
 UNRELIABLE PROCESSES.
 UNRELIABLE SUPPLIERS.
 UNTRAINED WORKERS.
 UNDISCIPLINED MANAGEMENT.
 UNRELIABLE WORKERS.
 GOAL OF A BUSINESS ORGN.
 Make money now as well as in the
future.
I. Provide a satisfying and secure
environment for employees now as
well in the future.
II. Provide satisfaction to the market
now as well as in the future.
WHAT IS THEORY
OF CONSTRAINTS?
TOC MEASUREMENT PROCESS :

 OPERATIONAL MEASURES
 Throughput(T)
 Inventory(I)
 Operating Expenses(O)

 FINANCIALMEASURES
 Net profit=T-O
 Return on Investment=(T-O)/I
 PERFORMANCE MEASURES
 Productivity = T/O
 Turnover = T/I
 FOCUSSING STEPS:
1. IDENTIFY the system’s constraint(s).
2. Decide how to EXPLOIT the system’s constraint(s).
3. SUBORDINATE everything else to the above
decision.
4. ELEVATE the system’s constraint(s).
5. Go to step one, but DON’T allow INERTIA to cause
a system constraint.
 THINKING PROCESS:
1) What to change?
 Identify the core problem.

2) To what to change to?

 Constructing a solution.

3) How to cause the change?

 Devising the implementation plan.
 TOOLS OF THINKING
PROCESS:
1) CURRENT REALITY TREE .

2) THE EVAPORATING CLOUD.

THE FUTURE REALITY TREE.

3) THE PREREQUISITE TREE.

THE TRANSITION TREE.
CORPORATE EXAMPLE:

EURIPA LAB,
SILICON VALLEY ,
CALIFORNIA.
QUESTIONS??