Module 9 Assignment: TOC

Answer all the questions and submit your answer report to Module 9 Assignment in Dropbox by the deadline. The report should be typed, single spaced, in one MS Word file. You must read Special Topic - TOC first as the introduction to TOC before you answer the questions.

Read the following article and answer the questions below.

"Constraint Management and Continuous Improvement" published in International Journal of Strategic Cost Management.

1.Prepare ( one-page article summary).

2. In the Conclusion section of the article, it states,

"Failure to recognize and manage a physical constraint can lead to bad decisions about quality improvements, engineering changes, reduction in setup times, and production efficiency."

Explain this statement in detail by using the examples/comments provided in the article.

COURSE NUMBER AND TITLE: 6200:610-481 Process Analysis & Cost Management SEMESTER AND YEAR: Summer 1, 2017 (On-line) INSTRUCTOR'S NAME: Dr. Il-woon Kim OFFICE LOCATION: CBA 241 CONTACT INFORMATION: 330 972-7461 (office); ikim@uakron.edu (email) OFFICE HOURS: MTTh 1:40-2:30 p.m. and by appointment Course Information Course Description Investigates management accounting and control systems and the use of accounting information in cost management, risk assessment, planning, decision making and performance evaluation. Course Web Page Class documents are available in Springboard. https://springboard.uakron.edu. School of Accountancy's Mission: The George W. Daverio School of Accountancy provides students with the educational background to become competent and responsible accounting professionals. With a rich history of (i) accounting education that serves both traditional and non-traditional students and (ii) close relationships with the professional community in Northern Ohio, we emphasize undergraduate and masters-level education with an applied focus. The School offers a Bachelor of Science degree in Accountancy, a Master of Science in Accountancy, and a Master of Taxation. The School stresses a learning environment that places primary importance on student success through effective teaching, complemented by faculty scholarship, interaction with the professional community, and service. Course Overview This course contributes to the CBA's mission of preparing competent and responsible business leaders by exposing students to concepts and methods of management accounting and control systems that are relevant and useful for careers as managers. Students will learn how to effectively use accounting information in cost management, planning, decision-making, control, and performance evaluation. Ethical issues related to management/cost accounting will be discussed throughout the course. Published articles and real world stories will be used for discussions. International aspects of selected topics will also be covered in class. Topics include target cost management in Japan, resource consumption accounting in Germany and activity-based costing/management in the United States. Course Learning Objectives - After completion of the course, students will be able to: 1. Explain management accounting practices and theories; specifically techniques and models for product costing, cost control, profit planning, break-even analysis, process management, and performance evaluation. 2. Apply the concepts and methods learned in this course to practical business situations. 3. Demonstrate critical thinking about the limitations of concepts and methods covered in this course. 4. Explore opportunities for enriching or applying course concepts to practical business situations in innovative and ethical ways. Required Text: Managerial Accounting for Managers by Noreen, Brewer, and Garrison (McGraw Hill). 4th edition; 2017; ISBN 978-1-259-57854-0 No supplemental materials are needed. We will not use CONNECT in this course section 1 Instructor Contact and Reply Policy My preferred method of communication is email. You can expect a response within 24 hours during the week and 48 hours for a weekend or holiday. My office hours will be held using Webex. Learning in the Online Environment Online Learning Commitment Expectations Online learning is different from face-to-face classes. The biggest difference is that you will be responsible for your own time management and organization. This requires discipline and attention to detail. The role of your instructor in an online course is to make the information for learning available to you and your role is to follow through with the structures put in place to help you learn. You must read all directions, follow all calendars, and ask questions when you are unsure of what to do. You need to log into the course and check your university email on a regular basisdaily is bestto ensure that you have the most up-to-date information. Specific directions for assignments will be posted in Springboard. Rubrics and/or specific grading criteria will also be posted in Springboard. You need to locate and understand all instructions, follow through on all assignments, and stay on track with due dates. You are also responsible for the technical requirements necessary for your course. This means that if you have computer or connectivity problems you are not guaranteed an extension; you must have backup systems available at all times. The University Library is always available to you, and technical support is only a phone call away. This course is organized into Modules on Springboard. The week begins Monday at 1:00 am and ends on Sunday at 11:59 pm Eastern Standard Time. Etiquette Online etiquette, sometimes called Netiquette, takes special attention because it lacks the visual cues that we rely on to give meaning to communication. 1 Avoid language that may come across as strong or offensive. Language can be easily misinterpreted in written communication. If a point must be stressed, review the statement to make sure that no one would be offended; then post the statement. Humor and sarcasm may easily be misinterpreted, so try to be as matter-of-fact and professional as possible. 2 Keep writing to a point and stay on topic. Online courses require a lot of reading. When writing, keep sentences focused and brief so that readers do not get lost in wordy paragraphs and miss the point of the statement. Also, do not introduce new topics; it may just confuse the readers. 3 Read first, write later. It is important to read all posts or comments before personally commenting to prevent repeating commentary or asking questions that have already been answered. 4 Review, review, then send. There's no taking back a comment that has already been sent, so it is important to double-check all writing to make sure that it clearly conveys the exact intended message. 5 An online classroom is still a classroom. Though the courses may be online, appropriate classroom behavior is still mandatory. Respect for fellow classmates and the instructor is as important as ever. 6 The language of the Internet. Do not write using all capital letters, because it will appear as shouting. Also, the use of emoticons can be helpful to convey nonverbal feelings (example: :-) or :-( ), but avoid overusing them. 7 Consider the privacy of others. Ask permission prior to giving out a classmate's email address or other information. 2 8 If possible, keep attachments small. If it is necessary to send pictures, change the size to an acceptable 100k. 9 No inappropriate material. Do not forward virus warnings, chain letters, jokes, etc. to classmates or instructors. The sharing of pornographic or insensitive material is forbidden Required Technologies and Technology Skills You must have access to a computer capable of handling Springboard (including uploading papers, streaming listening excerpts, and taking quizzes). Papers may be submitted in any of the following formats: Microsoft Word, Pages, PDF, Plain Text, or OpenDocument Format. To succeed in this course, you should be able to: 1 Use a mouse, including scrolling, left-clicking and right-clicking, or use a keyboard to accomplish the same tasks. 2 Type information for coursework. 3 Create documents, spreadsheets, and presentations. 4 Open, minimize, and close computer applications. 5 Participate in online bulletin/discussion boards. 6 Participate in online chat rooms. 7 Identify common file formats such as .doc or .docx, .pdf, and .txt. 8 Use appropriate plug-ins when required. 9 Print pages from a browser. Evaluation and Assessment Grading Policy: Two exams will be given in this class. Except in extraordinary circumstances, the exams will be administered on the dates indicated in the syllabus. Make-up exams are strongly discouraged and will be given only in circumstances that the instructor deems to be extraordinary (e.g., hospitalization from major illness, etc.). In addition to the two exams, your final grade will consist of points gained from nine quizzes from textbook chapters and six assignments based on video lectures and articles to be assigned throughout the course. Respondus Monitor You must download Respondus Monitor before taking an online assessment. Select this link for more information on Respondus Monitor, including directions on how to download and install it on the computer you will be using. Breakdown of Final Grade Description Exams (2) Textbook Chapter Quizzes (9) Assignments (6) TOTAL Points 200 45 90 335 Percentage of Final Grade 59.70% 13.43% 26.87% 100% 3 Grade Components 1. Exams (2): Two separate, closed-book exams will be given for the course. You will have two full days to take each exam from 1:00 a.m. of the first day till 11:59 p.m. of the second day. Exam dates are specified in Course Calendar of the syllabus. No cheat sheet and no cell phone calculator are allowed during the exam. There will be two types of questions for each exam: multiple choice and true-false. Multiple choice questions will include computational problems. Computational problems will be similar to Exercises assigned on the syllabus for each chapter. Please have your regular calculator ready to use. Time allowed for each exam will be 90 minutes. Upon the conclusion of each exam, you will be allowed to have 20 minutes to review the questions that you missed. However, the answers to those questions will not be provided. 2. Chapter Quizzes (9): A short quiz will be given for each chapter with 10 T-F questions. Even though it is an open-book quiz, total time allowed is limited to twenty minutes for each quiz with one attempt only. The purpose of the quiz is to make sure that students read each chapter on time. Hence, no late quiz will be accepted under any circumstances. If you miss a quiz, you lose 5 points. As you will see in Springboard website, there is no start date for each quiz, but each one has the end date. That means you must take that quiz by 11:59 p.m. of that specific end date. Upon the conclusion of each quiz, you will be allowed to have 10 minutes to review the questions that you missed. All quizzes will be available beginning June 11. 3. Assignments (6): Each assignment is based on video lectures and articles. Specific instructions including the deadline (until 11:59 p.m. of the day) will be provided with each assignment. Five points will be deducted for late submission without exceptions. Grading Scale Final grades will be assigned according to the University Grading Scale as follows: A 93-100 A90-92 B+ 87-89 B 83-86 B80-82 C+ 77-79 C 73-76 C70-72 D+ 67-69 D 63-66 D60-62 F below 60 Exam scores and course grades will not be sent via email. Cell phone calculators will not be allowed for the exam. (School of Accountancy policy.) 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You must read all News items posted on the course home page. You must read all posts to the course discussion in Springboard. You are responsible for all information posted to the course discussions. You are responsible for completing and submitting all assignments to the course drop box before the due date. You are responsible for clearly labeling your papers so I can identify your submission. For example, use your first and last name in the filename along with the assignment number. You are also responsible for submitting files in a format that I am able to open such as .doc, .docx, .pdf, .ppt, pptx, or .txt. Note that the University provides a Google Apps account to all students, and you can use Google Apps to create files in these file types. You are responsible for maintaining copies of your work and verifying that your Dropbox submission has been received. You will receive an email confirmation when you submit assignments. 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Note: If a faculty member suspects that a student has violated the Academic Misconduct provision in the Code of Student Conduct, the faculty member will follow the procedure outlined in Section J of the Code of Student Conduct. More information is available at the website of the Department of Student Conduct and Community Standards. University Registration Policies Withdrawal Policy 7 A student may drop a course through the 14th calendar day of a semester or proportionately equivalent dates during other sessions: a "drop" will not appear on your transcript, as the class simply "disappears." After the 14th calendar day period, students may withdraw from a course through MyAkron until the 49th calendar day of a semester or proportionally equivalent dates during other sessions: a "WD" will appear on your transcript. A withdrawal may affect your financial aid, eligibility for on-campus employment and eligibility for insurance, so speak with your advisor for details. Questions regarding registration can be addressed by the Office of the Registrar, 330-972-5400. Read more about the official University Withdrawal Policy. Incompletes Incompletes indicate that the student has completed passing work but that some part of the work is, for good and acceptable reason, not complete at the end of the term. Failure to make up the omitted work satisfactorily by the end of the following term, not including summer sessions, converts the "I" to an "F." When the work is satisfactorily completed within the allotted time the "I" is converted to the grade that the student has earned. Course Calendar - Topic Breakdown We ek Modu le Topic (Chapter #) Assignments / Readings / Tasks Readings: Chapter 1 1 1 Managerial Accounting: An Overview (1) Assignments: Complete Chapter 1 Quiz by 11:59 p.m. on June 13. Readings: Chapter 2 (Omit Appendix 2A) Two Articles 2 Managerial Accounting and Cost Concepts (2) Assignments: Complete Chapter 2 Quiz by 11:59 p.m. on June 15. Go over Review Problems 1 & 2 on pp. 44-45. Do Exercises 2-1, 2-3, 2-5 & 2-10. (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Read two articles assigned (A1 and A2). Follow the instructions in Module 2 Assignment and submit your report to Dropbox Module 2 Assignment by the deadline of June 17. (A1): \"Waiting for Change\" TIME, February 4, 2013 (A2): \"Lower Oil Prices Strike at Heart of Canada's Oil Sands Production\" NY Times, February 2, 2015 3 Cost-Volume-Profit Relationship (3) Readings: Chapter 3 8 We ek Modu le Topic (Chapter #) 2 Assignments / Readings / Tasks Assignments: Complete Chapter 3 Quiz by 11:59 p.m. on June 19. Go over Review Problem on pp. 95-98. Do Exercises 3-1, 3-2, 3-5, 3-6, 3-8, 3-9, 3-10, & 3-14 (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Readings: Chapter 4 (Omit Appendix 4A) 4 Job-Order Costing (4) Assignments: Complete Chapter 4 Quiz by 11:59 p.m. on June 22. Go over Review Problem on pp. 137-138. Do Exercises 4-1, 4-2, 4-3, 4-4, 4-8, & 4-9 (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Readings: Special Topic - Costs of Quality in Content of Springboard Two article Assignments: Read two articles assigned (A3 and A4). Follow the instructions in Module 5 Assignment and submit your report to Dropbox Module 5 Assignment by the deadline of June 23. 5 Special Topic: Costs of Quality (A3): \"A Microeconomic Approach to Quality Cost Control\" written by I. Kim; Journal of Cost Management (Fall 1989; Vol. 3 Number 3); pp. 11-16. (A4): \"Cost of Quality in Health Care: A Case Study in Clinical Laboratory\" written by Zahar, El Barkany and El Biyaali; Annals of the Faculty of Engineering Hunedoara - International Journal of Engineering (February 2015, Vol. 13 Issue 1); pp. 121-125. 6 3 Activity-Based Costing: A Tool to Aid Decision Making (6) Readings Chapter 6 (Omit Appendix 6A) Assignments 9 We ek Modu le Topic (Chapter #) Assignments / Readings / Tasks Complete Chapter 6 Quiz by 11:59 p.m. on June 26. Go over Review Problem on pp. 249-251. Do Exercises 6-1, 6-2, 6-3, 6-4, & 6-5. (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Readings: Read Textbook Pages 561-563 Special Topic - ABC & TC posted in Springboard. 7 Special Topics: ActivityBased Management and Target Costing Assignments: Read Special Topic-ABM & TC and one chapter article assigned (A5), and watch two video lectures (Vedio Lectures 1 and 2; the links are available in Module 7 Assignment). Follow the instructions in Module 7 Assignment and submit your report to Dropbox Module 7 Assignment by the deadline of June 29. A5: Chapter 11 of Review of Management Accounting Research; edited by Magdy AbdelKader. Palgrave Macmillan (2011); pp. 275294. Exam 1 Modules 1-7 on June 29 & 30 Readings: Chapter 9 4 8 Master Budgeting (9) 9 Special Topic: Theory of Constraints Assignments: Complete Chapter 9 Quiz by 11:59 p.m. on July 4. Go over review Problem pp. 411-413. Do Exercises 9-1, 9-2, 9-3, 9-4, 9-5, 9-6, & 9-7. (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Readings: Special Topic - TOC posted in Springboard. One article Assignments: Read Special Topic - TOC and one article assigned A6). Follow the instructions in Module 9 Assignment and submit your report to Dropbox Module 9 10 We ek Modu le Topic (Chapter #) Assignments / Readings / Tasks Assignment by the deadline of July 5. (A6): \"Constraint Management and Continuous Improvement\" written by Klein and DeBruine, International Journal of Strategic Cost Management (Summer 1998) Readings: Chapter 10 10 Flexible Budgets and Performance Analysis (10) Assignments: Complete Chapter 10 Quiz by 11:59 p.m. on July 7. Go over Review Problem on pp. 455-456. Do Exercises 10-1, 10-4, & 10-7. (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Readings: Special Topic - Customer Profitability posted in Springboard. One article 5 11 Special Topic: Customer Profitability Analysis Assignments: Read Special Topic - Customer Profitability and one article assigned (A7). Follow the instructions in Module 11 Assignment and submit your report to Dropbox Module 11 Assignment by the deadline July 9. (A7): \"Managing Customer Profitability,\" written by M. Epstein, M. Friedl, and K. Yuthas, Journal of Accountancy (December 1, 2008). 12 Standard Costs and Variances (11) Readings: Chapter 11 (Omit Appendix 11A and pages 462 - 469) Assignments: Complete Chapter 11 Quiz by 11:59 p.m. on July 10. Go over Review Problem on pp. 493-495 (skip variable overhead variances section) Do Exercises 11-1 & 11-2. (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) 11 We ek Modu le Topic (Chapter #) Assignments / Readings / Tasks Readings: Chapter 12 (Omit Appendix 12A and Appendix 12B) 13 Exam 2 Performance Management in Decentralized Organizations (12). Assignments: Complete Chapter 12 Quiz by 11:59 p.m. on July 12. Go over Review Problem on pp. 540-541. Do Exercises 12-1, 12-2, 12-3, 12-11 & 12-12. (Detailed solutions are provided in Solutions Manual in Dropbox Contents.) Watch seven video lectures (Video Lectures 3 through 10; the video links are available in Module 13 Assignment). Follow the instructions in Module 13 Assignment and submit your report to Dropbox Module 13 Assignment by the deadline of July 13. Modules 8-13 on July 14 & July 15 Note: The above schedule is intended to serve as a general outline and it is subject to change. Topics are tentative and may need to be modified during the semester. Homework and Project Assignments, Quizzes and Test dates will be announced in advance. 12 Theory of Constraints In 1985, THE GOAL was introduced into the market. Initially, it encountered a lot of skepticism - a management textbook written in the format of a love story? It will never be accepted. That was the opinion of most 'experts,' but as usual, they were wrong. THE GOAL was not just a book about a success story, it became a success story itself! Read and cherished by CEO's and floor works, by hard-nosed professionals and housewives, its impact was beyond my wildest expectations. Eliyahu M. Goldratt The theory of constraints recognizes that the performance of any organization is limited by its constraints. TOC then develops a specific approach to manage constraints to support the objective of continuous improvement. According to TOC, if performance is to be improved, an organization must identify its constraints, exploit the constraints in the short run, and in the longer term, find ways to overcome the constraints. 1. Definition of Constraints Any resources, activities, rules, and policies that prevent organizations or individuals from achieving their goal are referred to as constraints. Internal constraints External constraints Physical constraints Nonphysical constraints 2. Constraint Management Step 1: Identify the system's constraints. Step 2: Decide how to exploit the system's constraints. Obtain as much capability as possible from a constraining component, without undergoing expensive changes or upgrades. Step 3: Subordinate everything else to the decision in Step 2. The non-constraint components of the system must be adjusted to a "setting" that will enable the constraint to operate at maximum effectiveness. Step 4: Elevate the system's constraints. "Elevating" the constraint refers to taking whatever action is necessary to eliminate the constraint. This step is only considered if steps two and three have not been successful. Major changes to the existing system are considered at this step. Step 5: If in the previous steps, a constraint has been broken, go back to Step 1, but do not allow inertia to cause a system constraint. TOC is an on-going process, and the inertia that can build up after a change occurs can actually serve to prevent continuous improvement 3. Drum-Buffer-Rope The DBR system is a system for balancing the flow of production through a constraint in order to maximize the flow through the constraint and, thereby to improve overall productivity. It is a strategic technique to radically enhance the rate at which raw materials are converted into finished products by identifying and eliminating bottlenecks. Bottlenecks can appear not only in manufacturing but also in support functions along the value chain, such as purchasing and distribution. The drum is the constraint, and all production flows are synchronized to the drum. The purpose of the drum is to maximize throughput from the constraint. The rope is the sequence of processes prior to and including the constraint. The flow of production should be balanced through the rope by carefully timing and scheduling the activities from the beginning up to the constraint. The buffer is a minimum amount of work-inprocess required before the constraint to ensure that the constraint is kept busy. Buffer is also needed right after the constraint so that the product can be produced without disruption when something goes wrong at the constraint. 4. Project Management The critical chain is the set of activities which determines the overall duration of a project. It is typically regarded as the constraint. The five-step process can be applied to the management of the critical chain. 1. Identify the critical chain. 2. Exploit the critical chain. 3. Subordinate the other tasks, paths, and resources to the critical chain. 4. Elevate the critical chain by using added resources. 5. Go back to step1. What We Want Make projects on time. Produce more projects. What We Do Try to make tasks on time. Try to make people more efficient. Try to shrink task Shrink project times. times. Projects are within the budget. Detailed risk analysis. Consumer satisfaction. Make more detailed specifications. ___________________________________________________________ Mirabilia, Theory of Constraints. 5. TOC Applications (www.tocico.org; http://www.goldratt.com/) Manufacturing Marketing Project management System improvement Logical thinking skills Rational decision making Performance evaluation Product mix Pricing Launching new products Merchandising Healthcare management Education Social services 6. Thinking Process Thinking Process (TP) is a fascinating collection of logic-based tools that promises to help people diagnose problems, find solutions, and draw up successful implementation plans. The generic TP approach involves building logical trees, which basically are causeand-effect diagrams. Starting with observed symptoms of problems, cause-and-effect reasoning is used to deduce underlying causes or core problems. Other logical trees then are used to identify and refine solutions. TP is a remarkably coherent and logical framework for managing complex processes. However, it is quite general and, therefore, potentially powerful for identifying and implementing solutions to just about any problem. It can be applied to many kinds of problems from the shop floor to the executive suite. It can also be applied to strategic problems in multinational corporations or to small family or individual problems. The scope of an analysis using the Thinking Process is determined solely by scope of the problems a person wants to attack. Three Focusing Steps for Continuous Improvement Step 1: Decide what to change. Identify the core problem. Use the effect-cause-effect method. Current Reality Tree Step 2: Decide what to change to. Construct a simple, practical solution. Use the evaporating clouds method. Future Reality Tree Step 3: Decide how to cause the change. Develop the implementation plan. (Induce the appropriate people to invent solutions.) Use the Socratic Method. Prerequisite Tree Transition Tree TP Road Map (Note: This section is optional, and you may skip it.) Thinking process begins with a list of Undesirable Effects that should be eliminated. The Current Reality Tree is used to identify one or more core problems that cause those UDEs. The Evaporating Cloud method is used to find the conflict perpetuating the core problem and direct the search for a solution through challenging the assumptions underlying the conflict. The next step is to identify an injection that once implemented will change the environment in such as way that the assumptions in the Evaporating Cloud will no longer be valid. The Future Reality Tree is used to verify that the injection will eliminate the original UDEs without creating new problems. The Prerequisite Tree is used to identify obstacles to implementation of the injection. The Transition Tree is a detailed plan for overcoming those obstacles. Theory of Constraints In 1985, THE GOAL was introduced into the market. Initially, it encountered a lot of skepticism - a management textbook written in the format of a love story? It will never be accepted. That was the opinion of most 'experts,' but as usual, they were wrong. THE GOAL was not just a book about a success story, it became a success story itself! Read and cherished by CEO's and floor works, by hard-nosed professionals and housewives, its impact was beyond my wildest expectations. Eliyahu M. Goldratt The theory of constraints recognizes that the performance of any organization is limited by its constraints. TOC then develops a specific approach to manage constraints to support the objective of continuous improvement. According to TOC, if performance is to be improved, an organization must identify its constraints, exploit the constraints in the short run, and in the longer term, find ways to overcome the constraints. 1. Definition of Constraints Any resources, activities, rules, and policies that prevent organizations or individuals from achieving their goal are referred to as constraints. Internal constraints External constraints Physical constraints Nonphysical constraints 2. Constraint Management Step 1: Identify the system's constraints. Step 2: Decide how to exploit the system's constraints. Obtain as much capability as possible from a constraining component, without undergoing expensive changes or upgrades. Step 3: Subordinate everything else to the decision in Step 2. The non-constraint components of the system must be adjusted to a "setting" that will enable the constraint to operate at maximum effectiveness. Step 4: Elevate the system's constraints. "Elevating" the constraint refers to taking whatever action is necessary to eliminate the constraint. This step is only considered if steps two and three have not been successful. Major changes to the existing system are considered at this step. Step 5: If in the previous steps, a constraint has been broken, go back to Step 1, but do not allow inertia to cause a system constraint. TOC is an on-going process, and the inertia that can build up after a change occurs can actually serve to prevent continuous improvement 3. Drum-Buffer-Rope The DBR system is a system for balancing the flow of production through a constraint in order to maximize the flow through the constraint and, thereby to improve overall productivity. It is a strategic technique to radically enhance the rate at which raw materials are converted into finished products by identifying and eliminating bottlenecks. Bottlenecks can appear not only in manufacturing but also in support functions along the value chain, such as purchasing and distribution. The drum is the constraint, and all production flows are synchronized to the drum. The purpose of the drum is to maximize throughput from the constraint. The rope is the sequence of processes prior to and including the constraint. The flow of production should be balanced through the rope by carefully timing and scheduling the activities from the beginning up to the constraint. The buffer is a minimum amount of work-inprocess required before the constraint to ensure that the constraint is kept busy. Buffer is also needed right after the constraint so that the product can be produced without disruption when something goes wrong at the constraint. 4. Project Management The critical chain is the set of activities which determines the overall duration of a project. It is typically regarded as the constraint. The five-step process can be applied to the management of the critical chain. 1. Identify the critical chain. 2. Exploit the critical chain. 3. Subordinate the other tasks, paths, and resources to the critical chain. 4. Elevate the critical chain by using added resources. 5. Go back to step1. What We Want Make projects on time. Produce more projects. What We Do Try to make tasks on time. Try to make people more efficient. Try to shrink task Shrink project times. times. Projects are within the budget. Detailed risk analysis. Consumer satisfaction. Make more detailed specifications. ___________________________________________________________ Mirabilia, Theory of Constraints. 5. TOC Applications (www.tocico.org; http://www.goldratt.com/) Manufacturing Marketing Project management System improvement Logical thinking skills Rational decision making Performance evaluation Product mix Pricing Launching new products Merchandising Healthcare management Education Social services 6. Thinking Process Thinking Process (TP) is a fascinating collection of logic-based tools that promises to help people diagnose problems, find solutions, and draw up successful implementation plans. The generic TP approach involves building logical trees, which basically are causeand-effect diagrams. Starting with observed symptoms of problems, cause-and-effect reasoning is used to deduce underlying causes or core problems. Other logical trees then are used to identify and refine solutions. TP is a remarkably coherent and logical framework for managing complex processes. However, it is quite general and, therefore, potentially powerful for identifying and implementing solutions to just about any problem. It can be applied to many kinds of problems from the shop floor to the executive suite. It can also be applied to strategic problems in multinational corporations or to small family or individual problems. The scope of an analysis using the Thinking Process is determined solely by scope of the problems a person wants to attack. Three Focusing Steps for Continuous Improvement Step 1: Decide what to change. Identify the core problem. Use the effect-cause-effect method. Current Reality Tree Step 2: Decide what to change to. Construct a simple, practical solution. Use the evaporating clouds method. Future Reality Tree Step 3: Decide how to cause the change. Develop the implementation plan. (Induce the appropriate people to invent solutions.) Use the Socratic Method. Prerequisite Tree Transition Tree TP Road Map (Note: This section is optional, and you may skip it.) Thinking process begins with a list of Undesirable Effects that should be eliminated. The Current Reality Tree is used to identify one or more core problems that cause those UDEs. The Evaporating Cloud method is used to find the conflict perpetuating the core problem and direct the search for a solution through challenging the assumptions underlying the conflict. The next step is to identify an injection that once implemented will change the environment in such as way that the assumptions in the Evaporating Cloud will no longer be valid. The Future Reality Tree is used to verify that the injection will eliminate the original UDEs without creating new problems. The Prerequisite Tree is used to identify obstacles to implementation of the injection. The Transition Tree is a detailed plan for overcoming those obstacles