Goldratt’s Theory of Constraints, Case Study Example

The aggregation of the inspection depot prior to the sharpening and coating process could be implemented. This application would be performed in order to save the time that would be otherwise consumed working on defective units. In addition, the employees can be cross trained with regards to the processes applied in other departments in order to enable that the employees are able to assist in the sharpening and coating processes. In addition, some of the work can be outsourced. Furthermore, an inventory that is applied for buffering could be applied in order4 to ensure that the department does not exhaust their supply of items to process. Finally, the sharpening and coating processes can be re- engineered. The re- engineering would include administrating the workers in a more effective manner in order to ensure that they do not take breaks simultaneously.

The emphasis should be directed toward the Model C210. This is attributed to the Model C210 creating a more elevated quality of contribution margin for each of the units of the constraint.

  Model D400 Model C210
Hourly Contribution Margin $437.50 $1000.00
Time Invested In Sharpening and Coating Processes 0.8 hours 0.2 hours
Contribution Margin for Each Unit $350.00 $200.00

The time would be invested endeavoring on the Model C210. The benefit derived would be $1000.00.

The mean contribution for each hour invested in the sharpening and coating processes is $800.00. Considering that the inspo0ection depot will provide an accrual of 240 hours, this implies that the organization would be able to realize $192,000. The profit is calculated by taking 240 hours x $800.00 hourly contribution margin. This would hopefully demonstrate that organizations would be able to create substantial gains by releasing constraints (Cox & Schleier, 2010; Dettmer, 1997).

References

Cox, J., & Schleier, J. (2010). Theory of constraints handbook. New York: McGraw-Hill.

Dettmer, H. (1997). Goldratt’s theory of constraints. Milwaukee, Wis.: ASQC Quality Press.

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