Optimized Production Technology
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OPT is a computer-based production planning and scheduling system that seeks to maximize throughput by balancing flow rather than capacity, minimizing or eliminating bottlenecks, and using variable lot sizes. It identifies bottlenecks and focuses on keeping them 100% utilized in order to increase throughput, with the goal of increasing profit by increasing throughput, decreasing inventory, and decreasing operating expenses. The document provides an analogy comparing OPT principles to arranging marching troops to maintain a steady flow without unnecessary spreading out.
Optimized Production Technology
- 1. OPT Material From: “The Goal” and “The Race” By Goldratt and Fox
- 2. OPT (Optimized Production Technology) A computer based management system used for production planning and scheduling, seeking the goal of throughput maximization through the following: – Balanced flow, not capacity – Minimization and /or elimination of bottlenecks – Variable lot sizes Also know as: “Theory of Constraints”
- 3. OPT Philosophy The Goal: To Make Money Measures: 1. Net Profit 2. Return on Investment 3. Cash Flow
- 4. OPT Operational Measures 1. Throughput The rate at which goods are sold 2. Inventory Any raw materials, components, and finished goods that have been paid for but not sold 3. Operating Expenses The cost of converting inventory into throughput • Direct or indirect labor • Energy • Capital facilities
- 5. How to Achieve The Goal By the following: – Increasing throughput – Decreasing inventory – Decreasing operating expenses
- 6. OPT Key – “Identify Bottlenecks” Bottleneck: A point of storage in the manufacturing process that holds down the amount of product that a factory can produce. The basic approach is to identify bottlenecks, and concentrate on keeping them 100% busy, then find ways to increase throughput at the bottleneck, subject to demand.
- 7. Troops Analogy (I) • Spreading troops mean high inventories (e.g. work in process). Closely packed troops mean lower inventories.
- 8. Troops Analogy (II) • Rearranging the soldiers reduces spreading. By putting the slowest soldiers at the front and the fastest ones in the rear. – Good Idea, but may be impossible to put the slowest operation into the first operation
- 9. Troops Analogy (III) • Put Drummers in front row to set the pace and sergeants urge the soldiers to close any gaps. – Sergeant is the expeditor and drummer is the material management system assisted by a computer
- 10. Troops Analogy (IV) • “If a worker doesn’t have anything to do, let’s find him something to do.” – This mentality will cause workers to work at their own paces.
- 11. Troops Analogy (V) • The causes of excess inventories is when each worker works with full capacity.
- 12. Troops Analogy (VI) • Does the drum beat according to the constraints of the plant or according to some unrealistic assumptions .. Like: – Infinite capacity – Predetermined lead times – Fixed, constant batch sizes
- 13. Troops Analogy (VII) • Tie the rows of soldiers together to limit the spreading of the inventories. – The Invention of Henry Ford –The assembly line – Dr. Ohno from Toyota – The Kanban system
- 14. Troops Analogy (VIII) • Synchronized manufacturing assembly lines and kanbans. – Predetermined inventory buffers (either limited by space or number of cards) regulate the rate of production for assembly lines and kanban system. – “Stop working when the buffer is filled!” – The work is synchronized, inventory is low. But any significant disruption will cause the entire system to stop.
- 15. Troops Analogy (IX) The drum is held by the excess capacity of the gating operations Result: • Inventory is high • Current throughput is protected • Future throughput is in danger
- 16. Troops Analogy (X) The drum is held by marketing demands Result: • Inventory is low • Current throughput is in danger • Future throughput is increased
- 17. Troops Analogy (XI) • To prevent spreading, tie weakest soldier to the front row. • To protect overall pace, provide some slack in the rope
- 19. • The Capacity Constraint Resource (C.C.R) should dictate the schedule based on market demand and its own potential. • The schedule for succeeding operations (including assembly) should be derived accordingly. • The schedule of preceding operations should support the time buffer and thus be derived backwards in time from the C.C.R schedule
- 20. Synchronized Manufacturing – Locating the Constraints First step toward synchronized manufacturing is to identify the constraints. A Capacity Constraint manifests itself in all of the major business issues. An analysis of the major business issues can be used to identify the capacity constraint resource (CCR’s)
- 21. Synchronized Manufacturing – Beating the Drum Ensure maximum throughput through forward scheduling of the C.C.R.’s. Due dates give us the first, rough sequence, but the sequence must be modified under any one of four conditions…
- 22. Synchronized Manufacturing – Four Complicating Conditions • Different lead times from capacity constraint resources to due dates • One capacity constraint resource feeding another one • Set up at a capacity constraint resource • A capacity constraint resource feeding more than one part to the same product
- 23. Synchronized Manufacturing – Locating the Time Buffer • Concentrate protection not at the origin of a disturbance, but before critical operations • Inventory of the right parts in the right quantities at the right times in front of the right operations give high protection • Inventory anywhere else is destructive
- 24. Ten Rules of OPT 1. Utilization and activation of a resource are not the same – Activation is what should be done Utilization is what can be done “100% utilization of a non-bottleneck is wasteful.” 2. The level of utilization of a non-bottleneck is determined not by its own potential but by some other constraint in the system.
- 25. Ten Rules of OPT (Cont.) 3. An hour lost at a bottleneck is an hour lost for the total system. 4. An hour saved at a non-bottleneck is just a mirage. 5. Bottlenecks govern both the throughput and inventory in the system. 6. The transfer batch may not and often should not be equal to the process batch. 7. The process batch should be variable, not fixed.
- 26. Ten Rules of OPT (Cont.) 8. Capacity and priority should be considered simultaneously, not sequentially. 9. Balance flow, not capacity. 10. The sum of local optima is not equal to the global optimum.