Optimum production schedule and profit maximisation using the concept: Theory of constraints

The Theory of Constraints (TOC) is an example of a management philosophy built upon a limited number of assumptions and designed to provide a process of continuous ongoing improvement [1]. The assumption forming one foundation of TOC is that a system's outputs are determined by its constraints. The assumptions forming another foundation are new definitions for throughput, inventory and operating expense [2]. These definitions are designed to support the goal of the organisation, which, according to Goldratt, is to make money [3], TOC, previously referred to as Optimized Production Technology (OPT), is a production control methodology that maximises profits in a plant with a demonstrated bottleneck [4]. The process used by TOC to determine product mix that will maximise profitability is a very simple series of steps [5], In this article, a case study from an industry is considered to demonstrate how the application of concepts of TOC will maximise profit for an organisation. This paper further explains how TOC plays a vital role in increasing performance through a limited number of assumptions designed to provide a continuous process of improvement, as emphasised in Total Quality Management (TQM). This paper also shows the steps involved in solving a typical TOC problem along with optimisation of resources for increased demand conditions. This work has been carried out on an IBM/PC compatible system.