Disclaimer The material in these slides were developed

Disclaimer: The material in these slides were developed over time and represents Dr. Holt’s personal views and approach to TOC. It is not the view of Washington State University nor TOCICO. It may be dated, incomplete or absolutely wrong. While the text and figures in this presentation are helpful to facilitate teaching and discussion of these topics, without the words that go with the slides, the presentation is not complete and may not even make sense. This material is made available in the public domain as a service. Individuals may use this material as resources to teach their own TOC review seminars as long as they give reference to the source. There is no promise nor expectation that these materials are either necessary or sufficient to pass any of the TOCICO certification exams. Anyone using these materials should continue to study from the many other sources of excellent TOC literature available. In many cases, common knowledge is included here without reference. If you would like to improve any of these files, please do so. Your contribution will be included in future postings. Dr Holt. Theory of Constraints Fundamental Exam Review Overview the TOCICO Exams James R. Holt, Ph. D. , PE Professor Engineering Management © Washington State University-2010 jholt@wsu. edu http: //www. engrmgt. wsu. edu/ 1

TOCICO • Theory of Constraints International Certification Organization www. tocico. org • Certifies TOC Knowledge at § Fundamental Knowledge (Basic understanding of TOC as it applies to ALL applications. Can Pass in Segments as your TOC knowledge grows. ) § Application Level (Advanced understanding sufficient to apply and teach others) § Implementer Level (Highest Certification – Individual has proof of successful Implementations). © Washington State University-2010 2

TOCICO Certification Areas • Theory of Constraints International Certification Organization § Fundamentals § Application areas • Supply Chain Logistics • Project Management • Finance and Measures • Thinking Processes • TOC in Education • Holistic Business Strategy © Washington State University-2010 3

TOCICO Segmented Fundamentals Exam Fundamentals Certificate Multiple Choice Case Study (Identify, Exploit, Subordinate, Elevate, Go to Step 1) Fundamentals Certificate of TOC Philosophy • Inherent Potential • Inherent Simplicity • Inherent Win-Win • Five Focusing Steps • Three Questions Fundamentals Certificate of TOC Thinking Processes Fundamentals Certificate of TOC Applications TOC Finance & Measures • Conflict Cloud • DBR • Negative Branch • Project Management • Ambitious Target • T, I, OE • PQ Type Problem • Replenishment © Washington State University-2010 4

TOCICO Certification Exams Certification Steps 1. Fundamental Exams TOC Philosophy Thinking Process TOC Measures Applications (one of): Drum-Buffer-Rope Project Management Distribution F U N D A M E N T A L 2, Applications Exams 3. Implementation Cases Supply Chain Logistics Project Management Finance and Measures Thinking Process Business Strategy E X A M Fast Track Certification Process for TOC Experts Validated Application Case Exams Available Worldwide On Demand (FE Soon On-Line) © Washington State University-2010 5

TOCICO Application Exams • Applications Level Exams § Supply Chain Logistics § Project Management § Finance and Measures § Thinking Process § TOC in Education • Implementation Level Case Submissions § Complete (beginning to end) documentation of implemented case (with verification) © Washington State University-2010 6

TOC Improvement Approach 1. 2. 3. 4. 5. Improve the Flow in Operations (and Service Areas): Build a Decisive Competitive Edge Capitalize on the Competitive Edge Elevate Capacity only when needed Institutionalize the Process § When Formal Organization becomes the Informal § Remove Engines of Disharmony © Washington State University-2010 7

Flow Focus for Applications Exams Application Exam Plan Establish Release Buffer(s) Control Step 1 Execute Single Priority System Improve Active Applied POOGI Buffer Processes Mgmt Analysis Step 2 © Washington State University-2010 Step 3 8

Fundamentals Exam • Includes Key Topics about: § Theory of Constraints Philosophy § TOC Thinking Process Basics § TOC Applications (at least one area) • Operations (Drum-Buffer-Rope) • Project Management (CCPM) • Distribution (Replenishment) § TOC Finance and Measures § TOC Business Strategy (Holistic View) • These sub topics with study and practice prepare for the Fundamentals Exam Certification © Washington State University-2010 9

Topics in TOC Philosophy • • • Concept of the Weak Link in the Chain Five Focusing Steps All conflicts have a solution Solutions are often counter intuitive Systems are simple There is a Core Problem People are good Everything is harmonious Every one can improve Growth and Stability can both be achieved at the same time (Ever flourishing) © Washington State University-2010 10

Topics in TOC Thinking Process • • Cause and Effect Evaporating Cloud Surfacing Assumptions Invalidating Assumptions Negative Branch Reservation Overcoming Obstacles (PRT) Categories of Legitimate Reservation © Washington State University-2010 11

Topics in TOC Operations • • • Locating Capacity Constrained Resource Sizing Buffer (50% of existing to start) Rope Control (release) Buffer Management Simplified- DBR (finished goods buffers controlling release) • Make to Order • Make to Stock © Washington State University-2010 12

Topics in TOC Projects • • • Plan the Network (PRT) Aggressive Schedule (50% durations) Strategic Buffers (50% PB & FB) Daily Reporting (Time Remaining? What are you awaiting? How can we help you? ) • Fever Chart Concept • Buffer Management • Choke and Release • Sequencing mechanism • Resource alignment © Washington State University-2010 13

Topics in TOC Replenishment • • • Know components of Replenishment time Understand Plant Warehouse Understand Inventory Capacities of Plant Warehouse and Regional Warehouses • Daily Reporting of Sales • Frequent Delivery • Buffer Management Actions • Beneficial Impact of Distribution Solution on the Plant © Washington State University-2010 14

Topics in TOC Finance & Measures • • • Purpose of Finance (invest in improvements) Purpose of Measures (keep everyone focusing on the constraint and subordination) Decide on Investment decision (make/buy, equipment purchase) Impact of poor quality/delivery on system Impact of poor inventory practices on the system Financial Buffer Management T, I, OE, Cash Flow, Profit, Return on Inventory/Investment TDD, IDD Throughput Accounting worksheet © Washington State University-2010 15

Topics in TOC Business Strategy • Selecting the Core Problem of the Business • Determining the Direction for the competitive advantage • Deciding how to control the release • Establishing correct buffers • Determining the single priority system • Active Buffer Management • Analytical Buffer Analysis • POOGI (planned growth and stability of operations and management) © Washington State University-2010 16