Operations Management Processes

and Supply Chains

Eleventh Edition

Chapter 5
Constraint
Management

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What is a Constraint?
Constraint
• Any factor that limits the performance of a system and
restricts its output.
Bottleneck
• A capacity constraint resource (CCR) whose available
capacity limits the organization’s ability to meet the product
volume, product mix, or demand fluctuations required by
the marketplace

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The Theory of Constraints (1 of 2)
• The Theory of Constraints (TOC)
– A systematic management approach that focuses on
actively managing those constraints that impede a
firm’s progress toward its goal

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The Theory of Constraints (2 of 2)
Table 5.1 How the Firm’s Operational Measures Relate to Its Financial Measures
Operational TOC View Relationship to Financial Measures
Measures
Inventory (I) All the money invested in a system A decrease in I leads to an increase in
in purchasing things that it intends net profit, ROI, and cash flow.
to sell
Throughput (T) Rate at which a system generates An increase in T leads to an increase in
money through sales net profit, ROI, and cash flows.
Operating All the money a system spends to A decrease in OE leads to an increase in
Expense (OE) turn inventory into throughput net profit, ROI, and cash flows.
Utilization (U) The degree to which equipment, An increase in U at the bottleneck leads
space, or workforce is currently to an increase in net profit, ROI, and
being used; it is measured as the cash flows.
ratio of average output rate to
maximum capacity, expressed as a
percentage

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Key Principles of the TOC (1 of 2)
1. The focus should be on balancing flow, not on balancing
capacity.
2. Maximizing the output and efficiency of every resource
may not maximize the throughput of the entire system.
3. An hour lost at a bottleneck or constrained resource is an
hour lost for the whole system.
̶ An hour saved at a nonbottleneck resource does not make
the system more productive.
4. Inventory is needed only in front of bottlenecks and in
front of assembly and shipping points.

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Key Principles of the TOC (2 of 2)
5. Work should be released into the system only as
frequently as needed by the bottlenecks.
̶ Bottleneck flows = market demand

6. Activating a nonbottleneck resource is not the same as

utilizing a bottleneck resource.
̶ It doesn’t increase throughput or promote better
performance.
7. Every capital investment must be viewed from the
perspective of the global impact on overall throughput,
inventory, and operating expense.

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The Theory of Constraints
1. Identify the System Bottleneck(s)
2. Exploit the Bottleneck(s)
3. Subordinate All Other Decisions to Step 2
4. Elevate the Bottleneck(s)
5. Do Not Let Inertia Set In

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Managing Bottlenecks in Service
Processes
• Throughput time
– Total elapsed time from the start to the finish of a job
or a customer being processed at one or more work
centers

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Example 5.1 (1 of 4)
• Managers at the First Community Bank are attempting to shorten the time it
takes customers with approved loan applications to get their paperwork
processed. The flowchart for this process is shown in the next slide.
• Approved loan applications first arrive at activity or step 1, where they are
checked for completeness and put in order.
• At step 2, the loans are categorized into different classes according to the loan
amount and whether they are being requested for personal or commercial
reasons.
• While credit checking commences at step 3, loan application data are entered
in parallel into the information system for record-keeping purposes at step 4.
• Finally, all paperwork for setting up the new loan is finished at step 5. The time
taken in minutes is given in parentheses.

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Example 5.1 (2 of 4)
Figure 5.1 Processing Credit Loan Applications at First
Community Bank

Which single step is the bottleneck? The management is also

interested in knowing the maximum number of approved loans
this system can process in a 5-hour work day.
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Example 5.1 (3 of 4)
• We define the bottleneck as step 2, which has the highest time
per loan processed.
• The throughput time to complete an approved loan application is
15 + 20 + max(15, 12) + 10 = 60 minutes.
• The actual time taken for completing an approved loan will be
longer than 60 minutes due to nonuniform arrival of applications,
variations in actual processing times, and the related factors.
• The capacity for loan completions is derived by translating the
“minutes per customer” at the bottleneck step to “customer per
hour.” At First Community Bank, it is 3 customers per hour
because the bottleneck step 2 can process only 1 customer
every 20 minutes (60/3).
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Example 5.1 (4 of 4)
• Step 2 is the bottleneck constraint.
• The bank will be able to complete a maximum of only
three loan accounts per hour, or 15 new loan
accounts, in a 5-hour day.
• Management can increase the flow of loan
applications by increasing the capacity of Step 2 up to
the point where another step becomes the bottleneck.

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Managing Bottlenecks in
Manufacturing Processes
• Identifying Bottlenecks
– Setup times and their associated costs affect the size
of the lots traveling through the job or batch processes.

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Example 5.2 (1 of 4)
Diablo Electronics manufactures four unique products (A, B, C,
and D) that are fabricated and assembled in five different
workstations (V, W, X, Y, and Z) using a small batch process. Each
workstation is staffed by a worker who is dedicated to work a
single shift per day at an assigned workstation. Batch setup times
have been reduced to such an extent that they can be considered
negligible. Figure 5.2 is a flowchart of the manufacturing process.
Diablo can make and sell up to the limit of its demand per week,
and no penalties are incurred for not being able to meet all the
demand.
Which of the five workstations (V, W, X, Y, or Z) has the highest
utilization, and thus serves as the bottleneck for Diablo
Electronics?
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Example 5.2 (2 of 4)
Figure 5.2 Flowchart for Products A, B, C, and D

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Example 5.2 (3 of 4)
• Identify the bottleneck by computing aggregate workloads at each
workstation.
• The firm wants to satisfy as much of the product demand in a week as
it can.
• Each week consists of 2,400 minutes of available production time.
• Multiplying the processing time at each station for a given product with
the number of units demanded per week yields the workload
represented by that product.
• These loads are summed across all products going through a
workstation to arrive at the total load for the workstation, which is then
compared with the others and the existing capacity of 2,400 minutes.

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Example 5.2 (4 of 4)
Total
Load from Load from Load from Load from Load
Workstation Product A Product B Product C Product D (min)
V 60 × 30 = 1800 0 0 0 1,800
100 × 15 =
W 0 0 80 × 5 = 400 1,500
1,900

X 60 × 10 = 600 80 × 20 = 1,600 80 × 5 = 400 0 2,600

Y 60 × 10 = 600 80 × 10 = 800 80 × 5 = 400 100 × 5 = 500 2,300

100 × 10 =
Z 0 0 80 × 5 = 400 1,000
1,400

These calculations show that workstation X is the bottleneck, because

the aggregate work load at X exceeds the available capacity of 2,400
minutes per week.

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Managing Constraints in a Line
Process
• Line Balancing
– The assignment of work to stations in a line so as to
achieve the desired output rate with the smallest
number of workstations
• Precedence Diagram
– A diagram that allows one to visualize immediate
predecessors better

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Example 5.4 (1 of 2)
Green Grass, Inc., a manufacturer of lawn and garden equipment, is
designing an assembly line to produce a new fertilizer spreader, the Big
Broadcaster. Using the following information on the production process,
construct a precedence diagram for the Big Broadcaster.
Work Immediate
Description Time (sec)
Element Predecessor(s)
Bolt leg frame to
A hopper 40 None

B Insert impeller shaft 30 A

C Attach axle 50 A
D Attach agitator 40 B
E Attach drive wheel 6 B
F Attach free wheel 25 C
G Mount lower post 15 C
H Attach controls 20 D, E
I Mount nameplate 18 F, G
Blank Blank Total 244 Blank

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Example 5.4 (2 of 2)
Figure 5.5 Precedence Diagram for Assembling the Big
Broadcaster

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Managing Constraints in a Line
Process (1 of 4)
• Desired output rate
– Ideally is matched to the staffing or production plan
• Cycle time
– Maximum time allowed for work a unit at each station
1
c
r
where
c = cycle time in hours
r = desired output rate
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Managing Constraints in a Line
Process (2 of 4)
• Theoretical Minimum (TM)
– A benchmark or goal for the smallest number of
stations possible

TM 
 t
c
where
Σt = total time required to assemble each unit
c = cycle time

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Managing Constraints in a Line
Process (3 of 4)
• Idle time
– The total unproductive time for all stations in the
assembly of each unit
Idle time = nc − Σt
where
n = number of stations
c = cycle time
Σt = total time required to assemble each unit

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Managing Constraints in a Line
Process (4 of 4)
• Efficiency
– The ratio of productive time to total time, expressed as
a percent

Efficiency (%) 
 t
(100)
nc

• Balance Delay
– The amount by which efficiency falls short of 100
percent
– Balance delay (%) = 100 − Efficiency

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Example 5.5 (1 of 3)
Green Grass’s plant manager just received marketing’s
latest forecasts of Big Broadcaster sales for the next
year. She wants its production line to be designed to
make 2,400 spreaders per week for at least the next 3
months. The plant will operate 40 hours per week.
a. What should be the line’s cycle time?
b. What is the smallest number of workstations that she
could hope for in designing the line for this cycle time?
c. Suppose that she finds a solution that requires only five
stations. What would be the line’s efficiency?

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Example 5.5 (2 of 3)
a. First convert the desired output rate (2,400 units per week) to
an hourly rate by dividing the weekly output rate by 40 hours
per week to get units per hour. Then the cycle time is

1 1
c  ( hr unit )  1 minute unit  60 seconds unit
r 60
b. Now calculate the theoretical minimum for the number of
stations by dividing the total time, Σt, by the cycle time, c = 60
seconds. Assuming perfect balance, we have

TM 
 t 244 seconds
  4.067or 5 stations
c 60 seconds
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Example 5.5 (3 of 3)
c. Now calculate the efficiency of a five-station solution,
assuming for now that one can be found:

Efficiency 
 t
(100) 
244
(100)  81.3%
nc 5(60)

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Managing Constraints in a Line
Process (1 of 3)
• Finding a Solution
– The goal is to cluster the work elements into
workstations so that:
 The number of workstations required is minimized
 The precedence and cycle-time requirements are not
violated

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Managing Constraints in a Line
Process (2 of 3)
Table 5.3 Heuristic Decision Rules in Assigning the Next Work Element to a Workstation Being Created
Create one station at a time. For the station now being created, identify the unassigned work elements
that qualify for assignment: They are candidates if

1. All of their predecessors have been assigned to this station or stations already created.

2. Adding them to the workstation being created will not create a workload that exceeds the cycle time.

Decision Rule Logic

Longest work element Picking the candidate with the longest time to complete is an effort to fit in the most difficult
elements first, leaving the ones with short times to “fill out” the station.
Shortest work element This rule is the opposite of the longest work element rule because it gives preference in
workstation assignments to those work elements that are quicker. It can be tried because no
single rule guarantees the best solution. It might provide another solution for the planner
to consider.
Most followers When picking the next work element to assign to a station being created, choose the element
that has the most followers (due to precedence requirements). In Figure 5.5, item C has
three followers (F, G, and I) whereas item D has only one follower (H). This rule seeks to
maintain flexibility so that good choices remain for creating the last few workstations at the
end of the line.
Fewest followers Picking the candidate with the fewest followers is the opposite of the most followers rule.

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Managing Constraints in a Line
Process (3 of 3)
The theoretical minimum number of workstations is 5 and the
cycle time is 60 seconds, so this represents an optimal solution
to the problem.

Figure 5.6 Big Broadcaster Precedence Diagram Solution

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Application 5.3 (1 of 5)
A plant manager needs a design Work Time Immediate
Element (sec) Predecessor
for an assembly line to assembly A 12 ―
a new product that is being B 60 A
introduced. The time requirements C 36 ―
and immediate predecessors for D 24 ―
the work elements are as follows: E 38 C, D
F 72 B, E
G 14 ―
H 72 ―
I 35 G, H
J 60 I
K 12 F, J
Total = 435 Blank

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Application 5.3 (2 of 5)
Draw a precedence diagram, complete I, F, J, and K.
Work Time Immediate
Element (sec) Predecessor
A 12 ―
B 60 A
C 36 ―
D 24 ―
E 38 C, D
F 72 B, E
G 14 ―
H 72 ―
I 35 G, H
J 60 I
K 12 F, J
Total = 435 Blank

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Application 5.3 (3 of 5)
If the desired output rate is 30 units per hour, what are
the cycle time and theoretical minimum?

1 1
c  (3600)  120 sec unit
r 30

TM 
 t 435
  3.6 or 4 stations
c 120

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Application 5.3 (4 of 5)
Suppose that we are fortunate enough to find a solution
with just four stations. What is the idle time per unit,
efficiency, and the balance delay for this solution?

Idle time = nc   t = 4(120)  435  45 seconds

Efficiency (%) =
 t
(100) 
435
(100) = 90.6%
nc 480
Balance delay (%) = 100  Efficiency  100  90.6  9.4%

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Application 5.3 (5 of 5)
Using trial and error, one possible solution is shown below.

Work Elements Cumulative Idle Time

Station Assigned Time (c = 120)
1 H, C, A 120 0
2 B, D, G 98 22
3 E, F 110 10
4 I, J, K 107 13
A fifth station is not
5 Blank Blank
needed

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Rebalancing the Assembly Line
• Managerial Considerations
– Pacing is the movement of product from one station to
the next as soon as the cycle time has elapsed
– Behavioral factors such as absenteeism, turnover, and
grievances can increase after installing production
lines.
– The number of models produced complicates
scheduling and necessitates good communication.
– Cycle times are dependent on the desired output rate
or sometimes on the maximum workstations allowed.

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Solved Problem 1 (1 of 4)
Bill’s Car Wash offers two types of washes: Standard and Deluxe. The
process flow for both types of customers is shown in the following chart.
Both wash types are first processed through steps A1 and A2. The
Standard wash then goes through steps A3 and A4 while the Deluxe is
processed through steps A5, A6, and A7. Both offerings finish at the drying
station (A8). The numbers in parentheses indicate the minutes it takes for
that activity to process a customer.
Figure 5.7 Precedence Diagram

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Solved Problem 1 (2 of 4)
a. Which step is the bottleneck for the Standard car wash process? For
the Deluxe car wash process?

b. What is the capacity (measured as customers served per hour) of

Bill’s Car Wash to process Standard and Deluxe customers? Assume
that no customers are waiting at step A1, A2, or A8.

c. If 60 percent of the customers are Standard and 40 percent are

Deluxe, what is the average capacity of the car wash in customers
per hour?

d. Where would you expect Standard wash customers to experience

waiting lines, assuming that new customers are always entering the
shop and that no Deluxe customers are in the shop? Where would
the Deluxe customers have to wait, assuming no Standard
customers?
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Solved Problem 1 (3 of 4)
a. Step A4 is the bottleneck for the Standard car wash process,
and Step A6 is the bottleneck for the Deluxe car wash
process, because these steps take the longest time in the flow.
b. The capacity for Standard washes is 4 customers per hour
because the bottleneck step A4 can process 1 customer every
15 minutes (60/15). The capacity for Deluxe car washes is 3
customers per hour (60/20). These capacities are derived by
translating the “minutes per customer” of each bottleneck
activity to “customers per hour.”
c. The average capacity of the car wash is
(0.60 × 4) + (0.40 × 3) = 3.6 customers per hour.

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Solved Problem 1 (4 of 4)
d. Standard wash customers would wait before steps A1, A2, A3,
and A4 because the activities that immediately precede them
have a higher rate of output (i.e., smaller processing times).
Deluxe wash customers would experience a wait in front of
steps A1, A2, and A6 for the same reasons. A1 is included for
both types of washes because the arrival rate of customers
could always exceed the capacity of A1.

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Solved Problem (1 of 6)
A company is setting up an assembly line to produce 192 units per
8-hour shift. The following table identifies the work elements, times,
and immediate predecessors:
Work Element Time (sec) Immediate Predecessor(s)
A 40 None
B 80 A
C 30 D, E, F
D 25 B
E 20 B
F 15 B
G 120 A
H 145 G
I 130 H
J 115 C, I
Blank Total 720 Blank

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Solved Problem (2 of 6)
a. What is the desired cycle time (in seconds)?
b. What is the theoretical minimum number of stations?
c. Use trial and error to work out a solution, and show
your solution on a precedence diagram.
d. What are the efficiency and balance delay of the
solution found?

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Solved Problem (3 of 6)
a. Substituting in the cycle-time formula, we get
1 8hours
c  (3,600 sec unit)  150 sec unit
r 192units

b. The sum of the work-element times is 720 seconds,

so

TM 
 t

720 sec unit
 4.8 or 5 stations
c 150 sec unit-station

which may not be achievable.

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Solved Problem (4 of 6)
c. Precedence Diagram Work Immediate
Element Predecessor(s)
A None
Figure 5.8 Precedence Diagram
B A
C D, E, F
D B
E B
F B
G A
H G
I H
J C, I

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Solved Problem (5 of 6)

Work-Element Cumulative Idle Time

Station Candidate(s) Choice
Time (sec) Time (sec) (c = 150 sec)
S1 A A 40 40 110
Blank B B 80 120 30
Blank D, E, F D 25 145 5
S2 E, F, G G 120 120 30
Blank E, F E 20 140 10
S3 F, H H 145 145 5
S4 F, I I 130 130 20
Blank F F 15 145 5
S5 C C 30 30 120
Blank J J 115 145 5

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Solved Problem (6 of 6)
d. Calculating the efficiency, we get

Efficiency(%) 
 t
(100) 
720 sec unit
(100)
c 5  150 sec unit-station 
 96%

Thus, the balance delay is only 4 percent (100−96).

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