Systems Thinking and Theory of Constraints

Question 1

What is Integrated Decision Making

Answer 1

Big Picture Thinking

Thinking Globally, not Locally

Question 2

What 2 premises is TOC Based on?

Answer 2

The Goal of a business is to achieve sustainable growth now and in the future

A system’s constraint determines it’s output

Question 3

What are the layers of understanding?

Answer 3

The Thinking Process - What should we change? to what? and how?

Managing human behavior, policy Constraints, and physical constraints

Question 4

What is the real cost of inventory?

Answer 4

Longer lead times and poor delivery

defects not being detected soon enough

increased cost due to obsolescence, storage costs, overtime

Question 5

Cost Accounting Basics

Answer 5

Cost per Job

Variable Rate (Materials+revenue) * Jobs done

Variable Rate(1) + Variable Rate (2) … - Fixed costs = profit

Question 6

What is the 5 step process to TOC

Answer 6

1. Identify System Constraint(s)
2. Decide how to exploit the constraint
3. Subordinate everything to that decision
4. Elevate the systems constraints
5. if a constraint was broken, repeat

Question 7

What is a physical constraint

Answer 7

tangible; easy to recognize.

machine capacity, martial/space availability

Question 8

What is a market constraint

Answer 8

demand for a company’s products and services is less than the capacity of organization

Question 9

what is a policy constraint

Answer 9

anything not physical.

usually system of measures and methods that governs decisions of the cmopany

Question 10

What are the types of policy constraints

Answer 10

Mindset constraints
Measures constraints
methods constraints

Question 11

what is a mindset constraint

Answer 11

a constraint of thought process or culture of the organization blocks design and implantation of measures and methods to achieve goals

Question 12

What is a measures constraint

Answer 12

a constraint of the measurements system that drives behaviors that are not in line with organizational goals

Question 13

what are methods constraints

Answer 13

constraints when procedures and techniques used result in actions incompatible with goals

Question 14

How can we improve physical constraints?

Answer 14

eliminate idle time

reduce setup and run time per unit

improve quality

purchase additional capacity

Question 15

What is the throughput world?

Answer 15

perspective indicates that we should first focus on producing product

Question 16

What is the cost world

Answer 16

perspective had indicated that we should first focus on producing product