Theory of Constraints:

Capacity Planning

Long term capacity expansions are not the only solution to easiness the bottlenecks. The short term options, during the peak periods are temporary employment, part time employees, temporarily outsourcing etc. the managers are needed to find alternatives to increase the effective capacity utilization at bottlenecks, without experiencing the higher expense and poor customer service that are common whereas maintaining output rates at peak capacities. The answer to this type of problem is resolved by carefully monitoring the short term schedules, keeping bottlenecks resources as busy as possible. The common practice adopted by managers in these situations is to minimize the time lost at bottlenecks because jobs or customers are delayed at the upstream operations in the procedure, or because the necessary material is temporarily available. They should also minimize the unproductive time taken for setups, which is modifying over from one product or service to another. While changeovers are made at a bottleneck operation, the number of units or customers processed before next changeover should be large compared to number processed at less critical operations. Therefore maximizing the number processed per setup means that there will be fewer setups per year and therefore less time lost to setups. Firm's financial performance shall be increased through developing schedules that focus mostly on bottlenecks. Theory of constraints or drum-buffer-rope method, is a way available to management that focuses on all the types of blockage or obstacle that are in the way of obtaining maximum flow of value added funds or sales less sales discounts and variable costs. The blockage or impediments might be overloaded procedure such as order entry, a manufacturing operation, or new product development. The central idea of this theory is to focus on the blockages or bottlenecks to increase their throughout, thereby increasing the flow of whole value-added funds. The performance of the overall systems lies in the scheduling of the bottlenecks.