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James F. Cox III and John G. Schleier - Theory of Constraints Handbook

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James F. Cox III and John G. Schleier Theory of Constraints Handbook

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The definitive guide to the theory of constraints In this authoritative volume, the worlds top Theory of Constraints (TOC) experts reveal how to implement the ground-breaking management and improvement methodology developed by Dr. Eliyahu M. Goldratt. Theory of Constraints Handbook offers an in-depth examination of this revolutionary concept of bringing about global organization performance improvement by focusing on a few leverage points of the system. Clear explanations supplemented by examples and case studies define how the theory works, why it works, what issues are resolved, and what benefits accrue, and demonstrate how TOC can be applied to different industries and situations. Theory of Constraints Handbook covers: Critical Chain Project Management for realizing major improvements in delivering projects on time, to specification, and within budget Drum-Buffer-Rope (DBR), Buffer Management, and distribution for maximizing throughput and minimizing flow time Performance measures for applying Throughput Accounting to improve organizational performance Strategy, marketing, and sales techniques designed to increase sales closing rates and Throughput Thinking Processes for simple and complex environments TOC methods to ensure that services actions support escalating demand for services while retaining financial viability Integrating the TOC Thinking Processes, the Strategy and Tactic Tree, TOC measurements, the Five Focusing Steps of TOC, and Six Sigma as a system of tools for sustainable improvement

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Theory of Constraints Handbook

About the Editors

JAMES F. COX III, PhD, CFPIM, CIRM, holds TOCICO certifications in Production and Supply Chain, Performance Measurement, Critical Chain, Strategy and Tactics, and Thinking Processes. He is a JONAHs JONAH, Professor Emeritus, and was the Robert O. Arnold Professor of Business in the Terry College of Business at the University of Georgia. He has conducted numerous academic and practitioner Theory of Constraints workshops and programs on performance measurement, production, supply chains, management skills, project management, and the thinking processes.

Dr. Coxs research has centered on the Theory of Constraints for over 25 years. He has authored or co-authored three books on TOC and almost 100 peer reviewed articles. He was the co-editor of the APICS Dictionary, 7th, 8th, 9th, 10th, and 11th editions, and an invited contributor on the topic of Constraints Management to the Production and Inventory Management Handbook.

Dr. Cox has been a member of APICS for over 30 years, holding chapter, regional, and national offices. He served on the APICS Board of Directors for four years with two years as VP of EducationResearch and served on the APICS Educational and Research Foundation Board of Directors for nine years with four years as President. He was a founding member and elected to the founding Board of Directors of the Theory of Constraints International Certification Organization (TOCICO), a certification organization founded by Dr. Eli Goldratt. He later served as Director of Certification responsible for implementing TOCICOs certification program.

Now retired, JOHN G. SCHLEIER, Jr. was President and Chief Operating Officer of the Mortgage Services Division of Alltel, Inc., Executive Vice President of Computer Power, Inc., and Director of Office Systems and Data Delivery for IBM. In these positions, he directed major software development projects, sales administration, and financial functions. He was also Director of Information Systems for IBMs General Systems Division, where he provided oversight for Development Engineering, Manufacturing, and Headquarters systems. He developed information systems for manufacturing, sales, and IBM strategic planning functions and was winner of an IBM Outstanding Contribution Award. He was a regular lecturer on Strategic Planning at IBM Executive Briefing Centers over a period of 15 years, speaking to CEOs and top executives of major corporations. He frequently took consulting assignments dealing with complex project management issues around the world.

He served on the faculty of The University of Georgia College of Business Administration as IBM Executive in Residence and later as Executive Professor of Management, serving on both the Management Information Systems and Production Operations Management faculties. Mr. Schleier holds TOCICO certification in all disciplines. He co-authored Managing Operations: A Focus on Excellence, a college text emphasizing TOC concepts (North River Press, 2003). He also published Turkey Tales, a childrens book (Tate Publishing, 2010).

Theory of Constraints Handbook

Edited by

James F. Cox III
John G. Schleier, Jr.

Copyright 2010 by James F Cox III and John G Schleier Jr All rights - photo 1

Copyright 2010 by James F Cox III and John G Schleier Jr All rights - photo 2

Copyright 2010 by James F. Cox, III and John G. Schleier, Jr. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-166555-1

MHID: 0-07-166555-2

The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-166554-4, MHID: 0-07-166554-4

All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps.

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Information contained in this work has been obtained by The McGraw-Hill Companies, Inc. (McGraw-Hill) from sources believed to be reliable. However, neither McGraw-Hill nor its authors guarantee the accuracy or completeness of any information published herein, and neither McGraw-Hill nor its authors shall be responsible for any errors, omissions, or damages arising out of use of this information. This work is published with the understanding that McGraw-Hill and its authors are supplying information but are not attempting to render engineering or other professional services. If such services are required, the assistance of an appropriate professional should be sought.

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Contents

Aggregate Stock at the Highest Level in the Supply Chain:
The Plant/Central Warehouse (PWH/CWH)

1 For Appendices A and C to G see http://www.mhprofessional.com/TOCHandbook.

Preface

Beginning in the early 1980s with the OPT software, a software package for scheduling manufacturing operations, Dr. Eliyahu M. Goldratt started applying the concepts of the hard sciences to problems in organizations. Later, with the publication of

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