Managing Process

Constraints

Chapter 5

Copyright ©2016 Pearson Education, Limited. 5-1

 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
• 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

Table 5.1

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 The Theory of Constraints
First map and
analyze your
processes
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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 Key Principles of the TOC
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
5. Work should be released into the system only as
frequently as needed by the bottlenecks.
̶ Flow through Bottleneck = 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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 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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 Metrics for Analyzing Process
Task time: the time it takes to do a task.
Bottleneck: the task with the longest time.
Cycle time for a production line is the time between
successive (finished product) units coming off the end of the
line. It’s also the time of the bottleneck.

Throughput time is the minimum time it takes one

unit/customer to go from the beginning to the end of the line.

Capacity is the number of units finished in a specified time

(here, an hour). Its also equal to 1/cycle time

Utilization for a workstation is the fraction of time that the

7- 9
workstation is busy, i.e., time actually working ÷ time available
Cycle time of the whole line = time of the bottleneck task

Throughput = ∑ task times in the line

7- 10
 Task Time and Cycle Time

https://s3.amazonaws.com/he-assets-prod/interactives/013_blocked_and_starved/Launch.html
Copyright ©2013 Pearson Education 7 - 11
 Task Time and Cycle Time
with Multiple Workers

https://s3.amazonaws.com/he-assets-prod/interactives/022_cycle_time_multiple_
workers/Launch.html

Copyright ©2013 Pearson Education 7 - 12

 Experimenting with Cycle Time,
Throughput, Capacity, and
Utilization

• Simulation URL:
https://forio.com/simulate/harvard/process-
analytics

• Your Login ID: emba213

Your password: kayal
(problem 3)
Copyright ©2013 Pearson Education 7 - 13
When is Throughput more important ?

• When the tasks are being done on a customer

– you need to minimize customer presence in the
process.

• When throughput is more important than

productivity (productivity and efficiency relates to
cost while throughput relates to speed and
effectiveness).
– This applies to efforts to speed up time-to-market
in new product development and R&D.
Copyright ©2013 Pearson Education 7 - 14
 Example 5.1
• 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.
Copyright ©2016 Pearson Education, Limited. 5-15
 Example 5.1

Figure 5.1

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.
Copyright ©2016 Pearson Education, Limited. 5-16
 Example 5.1
• 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).
Copyright ©2016 Pearson Education, Limited. 5-17
 Example 5.1
• 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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 Application Problem
Two types of customers enter Barbara’s Boutique shop for
customized dress alterations. After T1, Type A customers
proceed to step T2 and then to any of the three workstations
at T3, followed by steps T4 and T7. After step T1,Type B
customers proceed to step T5 and then steps T6 and T7. The
numbers in the parentheses are the minutes it takes that
activity to process a customer.
T3-a
(14)

T2 T3-b T4
Type A (13) (10) (18)

T1 Type T3-c T7
(12) A or B? (11) (10)

Type B
T5 T6
(15) (22) 07 - 19
 Application Problem

a. What is the capacity per hour of Type A customers?

b. If 30 percent of the customers are Type A customers and 70
percent are Type B customers, what is the average capacity?
c. When would Type A customers experience waiting lines,
assuming there are no Type B customers in the shop? Where
would Type B customers have to wait, assuming no Type A
customers?

Copyright ©2013 Pearson Education 07 - 20

 T3-a
(14)

T2 T3-b T4
Type A
(13) (10) (18)

T1 Type T3-c T7
(12) A or B? (11) (10)

Type B
T5 T6
(15) (22)

a. For Type A customers

• Step T2 can process (60/13) = 4.62 customers per hour.
• Step T3 has three work stations and a capacity of (60/14) +
(60/10) + (60/11) = 15.74 customer per hour.
• Step T4 can process (60/18) = 3.33 customers per hour.
• The bottleneck for type A customers is T4 (18 minutes/customer).
• Capacity for type A is 1/18 = .05556 * 60 min = 3.33 cust/hr
07- 21
If 30 percent of the customers are
Type A customers and 70 percent are
Type B customers, what is the T3-a
average capacity? (14)

T2 T3-b T4
(13) (10) (18)
Type A

T1 Type T3-c T7
(12) A or B? (11) (10)

Type B
T5 T6
(15) (22)
b. For Type B customers
• T6 is the bottleneck for Type B customers.
• The capacity for Type B customers is (60/22) = 2.73 customers
per hour.
• The average capacity is 0.3(3.33) + 0.7(2.73) = 2.9 customers per
hour.
Copyright ©2013 Pearson Education 07- 22
 T3-a
(14)

T2 T3-b T4
(13) (10) (18)
Type A

T1 Type T3-c T7
(12) A or B? (11) (10)

Type B
T5 T6
(15) (22)

c. Type A customers would wait before steps T2 and T4 because

the activities immediately preceding them have a
higher rate of output.
Type B customers would wait before steps T5 and T6 for the
same reason. This assumes there are always new customers
entering the shop.
Copyright ©2013 Pearson Education 07- 23
 Managing Bottlenecks
in Manufacturing Processes
For Job and Batch processes (not Line processes)

• Identifying Bottlenecks
– Setup times and their associated costs affect the
size of the lots traveling through the job or batch
processes.
– Here we use workload/utilization to identify
bottlenecks.

Copyright ©2016 Pearson Education, Limited. 5-24

 Example 5.2
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?

Copyright ©2016 Pearson Education, Limited. 5-25

 from

Heat Gear
-1111 Lathe Mill Drill cut -1111
treat

Heat
222222222 Mill Drill treat Grind - 2222

Assembly
to
Heat
3333333333 Lathe Mill Grind - 3333
treat

Gear - 4444
44444444444444 Mill Drill
cut
 Example 5.2
Product A
Step 1 at Step 2 at Finish with
$5 workstation V workstation Y step 3 Product:A
(30 min) (10 min) at workstation X Price: $75/unit
Demand: 60 units/wk
Raw materials (10 min)
$5 Purchased parts
Product B
Step 1 at Finish with step 2
$3 workstation Y at workstation X Product:B
(10 min) (20 min) Price: $72/unit
Demand: 80 units/wk
Raw materials
$2 Purchased parts
Product C
Finish with
$2 Step 1 at Step 2 at Step 3 at step 4 Product:C
workstation W workstation Z workstation X at workstation Y Price: $45/unit
(5 min) (5 min) (5 min) (5 min) Demand: 80 units/wk
Raw materials $3 Purchased parts
Product D
Step 1 at Step 2 at Finish with step 3
$4 workstation W workstation Z at workstation Y Product:D
(15 min) (10 min) (5 min) Price: $38/unit
Demand: 100 units/wk
Figure 5.2 Raw materials $6
Purchased parts

Copyright ©2016 Pearson Education, Limited. 5-27

 Example 5.2
• 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.
Copyright ©2016 Pearson Education, Limited. 5-28
 Example 5.2
Load from Load from Load from Load from Total Load
Workstation
Product A Product B Product C Product D (min)

V 60 x 30 = 1800 0 0 0 1,800

W 0 0 80 x 5 = 400 100 x 15 = 1,500 1,900

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

60  10 = 600 80 x 10 = 800 80 x 5 = 400 100 x 5 = 500 2,300

Y
0 0 80 x 5 = 400 100 x 10 = 1,000 1,400
Z

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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 Drum-Buffer-Rope Systems
Drum-Buffer-Rope
A planning and control
system that regulates
te m the flow of work-in-
l sys
pul process materials at
Th e
the bottleneck or the
capacity constrained
resource (CCR) in a
productive system

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 Drum-Buffer-Rope Systems
• The bottleneck schedule is the drum because it
sets the beat or the production rate for the entire
plant and is linked to market demand.
• The buffer is the time buffer that plans early
flows into the bottleneck and thus protects it
from disruption.
• The rope represents the tying of material release
to the drum beat, which is the rate at which the
bottleneck controls the throughput of the entire
plant.
Copyright ©2016 Pearson Education, Limited. 5-31
 Drum-Buffer-Rope Systems
Constraint CCR
Non-constraint
Buffer (Bottleneck)
Material PROCESS A Time Buffer PROCESS B
Release Capacity Inventory Capacity
Schedule 800 500
units/wk units/wk

Rope Buffer Drum

Non-constraint Shipping
Buffer
PROCESS C Finished Goods
Inventory Shipping Market
Capacity Schedule Demand
700 units/wk 650 units/wk

Figure 5.3

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 Applying the Theory of Constraints
to Product Mix Decisions
• Contribution margin
– The amount each product contributes to profits
and overhead; no fixed costs are considered
when making the product mix decision

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 Example 5.3
The senior management at Diablo Electronics (see Example 5.2) wants
to improve profitability by accepting the right set of orders.
They collected the following financial data:
• Variable overhead costs are $8,500 per week.
• Each worker is paid $18 per hour and is paid for an entire week,
regardless of how much the worker is used.
• Labor costs are fixed expenses.
• The plant operates one 8-hour shift per day, or 40 hours each week.

Currently, decisions are made using the traditional method, which is to

accept as much of the highest contribution margin product as possible
(up to the limit of its demand), followed by the next highest
contribution margin product, and so on until no more capacity is
available.
Copyright ©2016 Pearson Education, Limited. 5-34
 Example 5.3
Pedro Rodriguez, the newly hired production supervisor, is
knowledgeable about the Theory of Constraints and
bottleneck-based scheduling. He believes that profitability
can indeed be improved if bottleneck resources were
exploited to determine the product mix.

What is the change in profits if, instead of the traditional

method used by Diablo Electronics, the bottleneck method
advocated by Pedro is used to select the product mix?

Copyright ©2016 Pearson Education, Limited. 5-35

 Product A Finish with
Step 1 at Step 2 at
$5 step 3 Product:A
workstation V workstation Y Price: $75/unit
(30 min) (10 min) at workstation X
Demand: 60 units/wk
Raw materials (10 min)
$5 Purchased parts
Product B
Step 1 at Finish with step 2
$3 Product:B
workstation Y at workstation X Price: $72/unit
(10 min) (20 min) Demand: 80 units/wk
Raw materials
$2 Purchased parts
Product C Finish with
$2 Step 1 at Step 2 at Step 3 at step 4 Product:C
workstation W workstation Z workstation X at workstation Y Price: $45/unit
(5 min) (5 min) (5 min) (5 min) Demand: 80 units/wk
Raw materials $3 Purchased parts
Product D
Step 1 at Step 2 at Finish with step 3
$4 Product:D
workstation W workstation Z at workstation Y
Price: $38/unit
(15 min) (10 min) (5 min)
Demand: 100 units/wk
Figure 5.2 Raw materials $6
Purchased parts

Copyright ©2016 Pearson Education, Limited. 5-36

 Example 5.3
Decision Rule 1: Traditional Method
Step 1: Calculate the contribution margin per unit of each
product as shown here.

A B C D
Price $75.00 $72.00 $45.00 $38.00

Raw material and purchased parts –10.00 –5.00 –5.00 –10.00

= Contribution margin $65.00 $67.00 $40.00 $28.00

When ordered from highest to lowest, the contribution

margin per unit sequence of these products is B, A, C, D.

Copyright ©2016 Pearson Education, Limited. 5-37

 Example 5.3
Step 2: Allocate resources V, W, X, Y, and Z to the products in the
order decided in Step 1. Satisfy each demand until the
bottleneck resource (workstation X) is encountered.
Subtract minutes away from 2,400 minutes available for
each week at each stage.
Work Minutes at Minutes Left After Minutes Left After Can Only Can Only
Center the Start Making 80 B Making 60 A Make 40 C Make 100 D

V 600 600
2,400 2,400 600
W 2,400 2,400 2,200 700
2,400
X 800 200 0 0
2,400
Y 1,600 800 300
2,400 1,000
Z 2,400 2,400 2,200 1,200
2,400

The best product mix according to this traditional approach

is then 60 A, 80 B, 40 C, and 100 D.
Copyright ©2016 Pearson Education, Limited. 5-38
 Example 5.3
Step 3: Compute profitability for the selected product mix.

Profits
Revenue (60  $75) + (80  $72) + (40  $45) + (100  $38) = $15,860

Materials (60  $10) + (80  $5) + (40  $5) + (100  $10) = –$2,200

Labor (5 workers)  (8 hours/day)  (5 days/week)  ($18/hour) = –$3,600

Overhead = –$8,500
Profit = $1,560

Manufacturing the product mix of 60 A, 80 B, 40 C, and

100 D will yield a profit of $1,560 per week.

Copyright ©2016 Pearson Education, Limited. 5-39

 Example 5.3
Decision Rule 2: Bottleneck Method

Select the best product mix according to the dollar

contribution margin per minute of processing time at the
bottleneck workstation X. This method would take advantage
of the principles outlined in the Theory of Constraints and get
the most dollar benefit from the bottleneck.

Copyright ©2016 Pearson Education, Limited. 5-40

 Example 5.3
Step 1: Calculate the contribution margin/minute of
processing time at bottleneck workstation X:

Product A Product B Product C Product D

Contribution margin $65.00 $67.00 $40.00 $28.00

10 minutes 20 minutes 5 minutes 0 minutes

Time at bottleneck

Contribution margin per minute $6.50 $3.35 $8.00 Not defined

When ordered from highest to lowest contribution margin/

minute at the bottleneck, the manufacturing sequence of
these products is D, C, A, B, which is reverse of the earlier
order. Product D is scheduled first because it does not
consume any resources at the bottleneck.
Copyright ©2016 Pearson Education, Limited. 5-41
 Example 5.3
Step 2: Allocate resources V, W, X, Y, and Z to the products in the
order decided in step 1. Satisfy each demand until the
bottleneck resource (workstation X) is encountered.
Subtract minutes away from 2,400 minutes available for
each week at each stage.
Work Minutes at Minutes Left After Minutes Left After Minutes Left After Can Only
Center the Start Making 100 D Making 80 C Making 60 A Make 70 B

V 2,400 2,400 2,400 600 600

W 2,400 900 500 500 500
X 2,400 2,400 2,000 1,400 0
Y 2,400 1,900 1,500 900 200
Z 2,400 1,400 1,000 1,000 1,000

The best product mix according to this bottleneck based

approach is then 60 A, 70 B, 80 C, and 100 D.
Copyright ©2016 Pearson Education, Limited. 5-42
 Example 5.3
Step 3: Compute profitability for the selected product mix.
Profits
Revenue (60  $75) + (70  $72) + (80  $45) + (100  $38) = $16,940
Materials (60  $10) + (70  $5) + (80  $5) + (100  $10) = –$2,350
Labor = –$3,600
(5 workers)  (8 hours/day)  (5 days/week)  ($18/hour)
Overhead = –$8,500
Profit = $2,490

Manufacturing the product mix of 60 A, 70 B, 80 C, and

100 D will yield a profit of $2,490 per week.

Copyright ©2016 Pearson Education, Limited. 5-43

 Application 5.1
• O’Neill Enterprises manufactures three unique products (A, B, C) that
are fabricated and assembled in four different workstations (W, X, Y, Z)
using a small batch process.
• Each of the products visits every one of the four workstations, though
not necessarily in the same order.
• Batch setup times are negligible.
• O’Neill can make and sell up to the limit of its demand per week, and
there are no penalties for not being able to meet all the demand.
• Each workstation is staffed by a worker dedicated to work on that
workstation alone, and is paid $12 per hour.
• Variable overhead costs are $8000/week. The plant operates one 8-
hour shift per day, or 40 hours/week.
• Which of the four workstations W, X, Y, or Z has the highest total
workload, and thus serves as the bottleneck for O’Neill Enterprises?

Copyright ©2016 Pearson Education, Limited. 5-44

 Application 5.1
Product A Flowchart for Products A, B, and C

Step 1 at Step 2 at Step 3 at Finish with Product: A

$7 workstation W workstation Y workstation X step 4 Price: $90/unit
(10 min) (15 min) (9 min) at workstation Z Demand:65 units
(16 min) /wk
Raw materials
$6 Purchased part
Product B
Step 1 at Step 2 at Step 3 at Finish with
$9 workstation X workstation W workstation Y step 4 Product: B
Price:
at workstation Z $85/unit
(12 min) (10 min) (10 min)
(13 min)Demand:70 units/
Raw materials wk
$5 Purchased part

Product C
Step 3 at Finish with Product: C
Step 1 at Step 2 at step 4 Price: $80/unit
$10 workstation W
workstation Y workstation X at workstation Z Demand: 80
(5 min) (10 min) (12 min)
(10 min) units/wk
Raw materials $5 Purchased part

Copyright ©2016 Pearson Education, Limited. 5-45

 Application 5.1
Identify the bottleneck by computing total workload at
each workstation. The firm wants to satisfy as much of
the product demand in a week as it can. Each week
consists of 2400 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 capacity load. These loads are summed across
all products going through that workstation and then
compared with the existing capacity of 2400 minutes.

Copyright ©2016 Pearson Education, Limited. 5-46

 Application 5.1
Work Load from Load from Load from Total Load
Station Product A Product B Product C (minutes)
W (65x10)=650 (70x10)=700 (80x12)=960 2310
X (65x9)=585 (70x12)=840 (80x10)=800 2225
Y (65x15)=975 (70x10)=700 (80x5)=400 2075
Z (65x16)=1040 (70x13)=910 (80x10)=800 2750

These calculations show that workstation Z is the bottleneck,

because the aggregate work load at Z exceeds the available
capacity of 2400 minutes per week.

Copyright ©2016 Pearson Education, Limited. 5-47

 Application 5.2
• The senior management at O’Neill wants to improve the
profitability of the firm by accepting the right set of orders.
• Currently, decisions are made to accept as much of the highest
contribution margin product as possible (up to the limit of its
demand), followed by the next highest contribution margin
product, and so on until no more capacity is available.
• Since the firm cannot satisfy all the demand, the product mix must
be chosen carefully.
• Jane Hathaway, the newly hired production supervisor, is
knowledgeable about the Theory of Constraints and bottleneck
based scheduling. She believes that profitability can indeed be
approved if bottleneck resources were exploited to determine the
product mix.
Copyright ©2016 Pearson Education, Limited. 5-48
 Application 5.2
Decision rule 1: Traditional method

Step 1: Calculate the profit margin per unit of each product

as shown below
  A B C
Price
$90.00 $85.00 $80.00

Raw Material & Purchased Parts –13.00 –14.00 –15.00

= Contribution Profit Margin $77.00 $71.00 $65.00

When ordering from highest to lowest, the profit margin per

unit order of these products is ABC.
Copyright ©2016 Pearson Education, Limited. 5-49
 Application 5.2
Step 2: Allocate resources W, X, Y, and Z to the products in the
order decided in step 1. Satisfy each demand until the
bottleneck resource (workstation Z) is encountered.
Subtract minutes away from 2400 minutes available for
each week at each stage.

Work Center Starting After 65 A After 70 B Can Only Make 45 C

W 2400 1750 1050 510
X 2400 1815 975 525
Y 2400 1425 725 500
Z 2400 1360 450 0

The best product mix is 65 A, 70 B, and 45 C

Copyright ©2016 Pearson Education, Limited. 5-50

 Application 5.2
Step 3: Compute profitability for the selected product mix.

  Profits
Revenue $15400
Materials
–$2500
Overhead
–$8000
Labor
–$1920
Profit
$2980

Manufacturing the product mix of 65 A, 70 B, and 45 C will

yield a profit of $2980.

Copyright ©2016 Pearson Education, Limited. 5-51

 Application 5.2
Decision rule 2: Bottleneck-based approach

Step 1: Calculate the contribution/minute of processing time

at bottleneck workstation Z:

Product A Product B Product C

Contribution Margin $77.00 $71.00 $65.00
Time at Bottleneck 16 minutes 13 minutes 10 minutes
Contribution Margin per minute 4.81 5.46 6.50

When ordering from highest to lowest contribution margin/minute

at the bottleneck, the manufacturing sequence of these products is
CBA, which is reverse of the traditional method order.

Copyright ©2016 Pearson Education, Limited. 5-52

 Application 5.2
Step 2: Allocate resources W, X, Y, and Z to the products in the
order decided in step 1. Satisfy each demand until the
bottleneck resource (workstation Z) is encountered.
Subtract minutes away from 2400 minutes available for
each week at each stage.

Work Center Starting After 80 C After 70 B Can Only Make 43 A

W 2,400 1,440 740 310
X 2,400 1,600 760 373
Y 2,400 2,000 1300 655
Z 2,400 1,600 690 2

The best product mix is 43A, 70B, and 80C

Copyright ©2016 Pearson Education, Limited. 5-53

 Application 5.2
Step 3: Compute profitability for the selected product mix. The
new profitability figures are shown below based on the
new production quantities of 43A, 70B, and 80C.
  Profits
Revenue $16220
Materials
–$2739
Overhead
Labor –$8000
Profit –$1920
$3561

Manufacturing the product mix of 43 A, 70 B, and 80 C

will yield a profit of $3561.

Copyright ©2016 Pearson Education, Limited. 5-54

 Managing Constraints
in a Line Process (assembly)
Uses another approach to address bottlenecks by
creating workstations with balanced workloads.

• 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
Copyright ©2016 Pearson Education, Limited. 5-55
 Example 5.4
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 Description Time (sec) Immediate
Element Predecessor(s)
A Bolt leg frame to 40 None
hopper
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
Total 244

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 Example 5.4

Figure 5.5

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 Managing Constraints in
a Line Process
• 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
• Theoretical Minimum (TM)
– A benchmark or goal for the smallest number of stations
possible

t
TM =
c
where
t = total time required to
assemble each unit
c = cycle time

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 Managing Constraints in
a Line Process
• Idle time
– The total unproductive time for all stations in the assembly of each
unit

Idle time = nc – t
where
n = number of stations
c = cycle time (here its based on demand or
desired output)
t = total time required to assemble each
unit
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 Managing Constraints in
a Line Process
• Efficiency
– The ratio of productive time to total time, expressed as a percent

t
Efficiency (%) = nc(100)

• Balance Delay
– The amount by which efficiency falls short of 100 percent

Balance delay (%) = 100 – Efficiency

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 Example 5.5
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
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.

The cycle time c = 1/r

( r is desired output rate or capacity)

r = 2400 unit/w * 1 w/40 h = 60 unit/h

c = 1/r = 1/60 (hr/unit) = 0.01667 h/u * 3600 s/h
= 60 seconds/unit

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 Example 5.5

b. Now calculate the theoretical minimum for the number

of stations by dividing the total time, t, by the cycle
time, c = 60 seconds. Assuming perfect balance, we have

t 244 seconds
TM = = = 4.067 or 5 stations
c 60 seconds

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 Example 5.5
c. Now calculate the efficiency of a five-station solution,
assuming for now that one can be found:
t 244
Efficiency = (100) = (100) = 81.3%
nc 5(60)

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 Managing Constraints in
a Line Process
• 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

Table 5.3

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 Example 5.4

Figure 5.5

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 Managing Constraints in
a Line Process
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

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

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

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 Application 5.3
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

t 435
TM = = = 3.6 or 4 stations
c 120

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 Application 5.3
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

t 435
Efficiency (%) = (100) = (100) = 90.6%
nc 480
Balance delay (%) = 100 – Efficiency = 100 – 90.6 = 9.4%

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 Application 5.3
Using trial and error, one possible solution is shown below.

Work
Elements Idle Time
Station Assigned Cumulative 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
5 A fifth station is not 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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 Little’s Law
Inventory = Flow Rate X Throughput time

Inventory L : is a quantity. It could be units, people, WIP, raw material waiting outside or
inside the process.

Flow Rate λ : is a flow rate going in or out of the process and its measured in units/time.
It could be customers or material arriving or leaving the process. Its also called
production rate, demand rate, arrival rate. Its related to capacity.

Throughput time W : time/unit from start to finish inside process (as before, but here it includes
processing time and also waiting time)

W= L/λ or λ=L/W

We also use $ in little’s law to trace the money tied up in the process (inventory value and cost of
goods sold).

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 Example using Little’s law

Your Email Inbox has 100 emails. On average, you can

respond to 30 emails a day. How long does it take you,
on average, to respond to each email.
Inventory = Flow Rate X Throughput time

Inventory L = ?
Flow Rate λ = ?
Throughput time W = ?

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 Solved Problem 1
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

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 Solved Problem 1
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
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
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 2
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
Total 720

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 Solved Problem 2
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 2
a. Substituting in the cycle-time formula, we get

1 8 hours
c= = (3,600 sec/hr) = 150 sec/unit
r 192 units

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

t 720 sec/unit
TM = = = 4.8 or 5 stations
c 150 sec/unit-station

which may not be achievable.

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 Solved Problem 2
c. Precedence Diagram
Work Immediate
Element Predecessor(s)
A None
B A
C D, E, F
D B
E B
F B
G A
H G
I H
J C, I

Figure 5.8

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 D

Solved Problem 2 B
25

E C
80 20 30
J

A F 115

40 G 15 I
H
120 130
145

Station Candidate(s) Choice Work-Element Cumulative Idle Time

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

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 Solved Problem 2
d. Calculating the efficiency, we get

t 720 sec/unit (100)

Efficiency (%) = nc (100) =
5(150 sec/unit)

= 96%

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

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