Deck 23: Theory of Constraints

Question 1

A synchronous manufacturing system does not have excess capacity throughout the system, except for the bottleneck.

Answer 1

False
Explanation: Synchronous manufacturing has excess capacity throughout the system, except for the bottleneck.

Question 2

Synchronous manufacturing refers to the entire production process working together in harmony to achieve the goals of the firm.

Answer 2

True
Explanation: Underlying Goldratt's work is the notion of synchronous manufacturing, which refers to the entire production process working in harmony to achieve the profit goal of the firm.

Question 3

The operational measure of throughput is "the rate at which money is generated by the system through production of goods and services that might be sold."

Answer 3

False
Explanation: Throughput is the rate at which money is generated by the system through sales.

Question 4

From an operations standpoint, one of the goals of the firm under the theory of constraints is to increase throughput while simultaneously reducing inventory and reducing operating expense.

Question 5

According to the theory of constraints, capacity is the time available for production.

Question 6

One way to find a bottleneck is to run a capacity resource profile.

Question 7

According to the theory of constraints, it is wrong for manufacturers to try to match capacity with demand by attempting to balance capacity across a sequence of processes.Unbalanced capacity is better.

Question 8

Dr.Eli Goldratt feels that the goal of a firm is to make useful products efficiently.

Question 9

According to the theory of constraints, a bottleneck is any resource whose capacity is greater than the demand placed on it.

Question 10

Mr.Goldratt's "theory of constraints" is useful only in manufacturing settings.

Question 11

According to the theory of constraints, throughput is the rate at which product is passed through the manufacturing system.

Question 12

An MRP system can allow for product rejects by building a larger batch than is demanded, but a JIT system cannot tolerate poor quality.

Question 13

According to the theory of constraints, the term "productivity" is defined as all those actions that bring a company closer to its goals.

Question 14

A way to find a bottleneck is to use one's knowledge of a particular plant, look at the system in operation, and talk with supervisors and workers.

Question 15

On an assembly line, a process batch can be infinite.

Question 16

According to the theory of constraints, throughput is the rate at which money is generated by the system through sales.

Question 17

OPT stands for optimal purchasing technique.

Question 18

Buffer inventory in front of a bottleneck is called a time buffer.

Question 19

According to the theory of constraints, a capacity-constrained resource (CCR) is one whose utilization is close to capacity and could be a bottleneck if it is not scheduled carefully.

Question 20

According to the theory of constraints, a non-bottleneck is any resource where capacity is less than the demand placed on it.

Question 21

The "dollar days" inventory measurement may be used to focus management's attention on where inventory is located.

Question 22

Rather than try to adjust the master production schedule to change resource loads, it is more practical to control the flow at each bottleneck or CCR to bring capacities in line.

Question 23

Because of statistical fluctuation (processing times vary around an average processing time), dependent sequences can operate without any inventory between workstations.

Question 24

Looking at the loads that are placed on each resource by the products that are scheduled through them is called process flow profiling.

Question 25

The term "dependent events" refers to a process sequence.

Question 26

The "dollar days" inventory measurement can be used in purchasing to discourage large work-in-process and producing earlier than is needed.

Question 27

Transfer batch is another term for process batch.

Question 28

On an assembly line, a transfer batch can be one unit.

Question 29

In a process sequence where a product flows from process A to process B, process A is called the mother process.

Question 30

Larger transfer batches give shorter lead times and lower inventories, and there is more material handling than smaller transfer batches.

Question 31

JIT requires a stable production level.When compared to synchronous manufacturing, this is viewed as a negative aspect of JIT.

Question 32

In a process sequence where a product flows from process A to process B, process B is called the dependent process.

Question 33

A process batch should be no larger than the transfer batch.

Question 34

JIT requires vendors to be located nearby.When compared to synchronous manufacturing, this is viewed as an advantage of JIT.

Question 35

Departments within a firm often are at odds with each other because reward systems are often not synchronized with the basic goal of the firm: to make money.

Question 36

JIT requires work-in-process when used with kanban so there is inventory to pull.When compared to synchronous manufacturing, this is viewed as a negative aspect of JIT.

Question 37

In a process sequence where a product flows from process A to process B, process B is called the contingent process.

Question 38

The synchronous manufacturing approach uses backward scheduling.

Question 39

Smaller transfer batches give lower work-in-process inventory and faster product flow.

Question 40

The "dollar days" inventory measurement results from a complex algorithm used to compute individual units of inventory and their respective ordering and holding costs.

Question 41

Which of the following is one of Dr.Eli Goldratt's rules of production scheduling for optimized production technology?

A)If you lose an hour at a bottleneck, it is better than making scrap.
B)Do not balance capacity, balance the flow.
C)Do not allow bottlenecks to govern the flow of the line.
D)An hour saved at a bottleneck operation is a mirage.
E)The amount in a process batch should be fixed when the batch is begun and not changed over time or along its route.

Question 42

Name the five kinds of time that make up production cycle time according to Goldratt's theory of constraints.(1) _________________________________.(2) _________________________________.(3) _________________________________.(4) _________________________________.(5) _________________________________.

Question 43

According to the theory of constraints, which of the following can be a CCR?

A)Factory layout
B)Product design
C)An employee
D)A customer
E)Sales literature

Question 44

According to the theory of constraints, which of the following is an operational measurement that can be used to measure the firm's ability to make money?

A)Net profit
B)Throughput
C)Return on investment
D)Sales
E)Direct labor hours

Question 45

Statistical fluctuation refers to the normal variation about a mean or average.

Question 46

The effects of statistical variations in processing times in a dependent sequence will eventually cancel themselves out due to the law of averages.

Question 47

Which of the following is not an important concept in TOC?

A)CCR
B)Rope
C)Drum
D)Buffer
E)File

Question 48

Which of the following is one of Dr.Eli Goldratt's rules of production scheduling for optimized production technology?

A)Utilization and activation of a resource are not the same.
B)Do not allow bottlenecks to govern the flow of the line.
C)An hour lost at a bottleneck saves an hour for the entire system.
D)Balance the capacities, not the flows.
E)The level of utilization of a bottleneck resource is not determined by its own potential but by some other constraint in the system.

Question 49

According to the theory of constraints, which of the following is a financial measurement that can be used to measure the firm's ability to make money?

A)Net profit
B)Throughput
C)Inventory
D)Sales
E)Retained earnings

Question 50

What is a word indicating a resource whose capacity is less than the demand placed on it? _________________________________.

Question 51

Which of the following is an approach to dealing with a bottleneck?

A)Keep a buffer inventory in front of it to ensure that it always has something to work on.
B)Use Johnson's sequencing rules on bottleneck operations.
C)Don't worry about the bottleneck; it will take care of itself.
D)Move things to a faster bottleneck.
E)Pay an incentive bonus to workers on the bottleneck operation.

Question 52

A useful measure of inventory performance is called "dollar days." In which of the following areas are dollar days measurements not useful?

A)Marketing
B)Research and development
C)Manufacturing
D)Project management
E)Purchasing

Question 53

Which of the following is a negative aspect of JIT compared to synchronous manufacturing?

A)JIT cannot deal with outside vendors.
B)JIT needs broadly fluctuating production levels.
C)JIT does not allow very much flexibility in the products produced.
D)JIT requires a great deal of workforce computational skills.
E)JIT does not deal well with bottlenecks.

Question 54

What is the rate at which money is generated by the system through sales called? _________________________________________.

Question 55

According to the theory of constraints, which of the following is a kind of time that makes up the cycle time in production?

A)Quality time
B)Break time
C)Research time
D)Just-in-time
E)Idle time

Question 56

According to the theory of constraints, which of the following is an operational measurement that can be used to measure the firm's ability to make money?

A)Inventory
B)Sales
C)Operating revenue
D)Unit cost
E)Overhead per unit

Question 57

According to Mr.Goldratt, what is the goal of the firm? ___________________________________.

Question 58

According to the theory of constraints, which of the following is a financial measurement that can be used to measure the firm's ability to make money?

A)Operating expenses
B)Cash flow
C)Inventory
D)Sales
E)Dividends

Question 59

According to the theory of constraints, which of the following is a kind of time that makes up the cycle time in production?

A)Process time
B)Starting time
C)Quitting time
D)Information time
E)Finish time

Question 60

Which of the following is a "focusing step" of Dr.Eli Goldratt's theory of constraints?

A)Reduce system constraints.
B)Reinforce system constraints.
C)Support system constraints.
D)If you have no system constraints, make some.
E)Identify system constraints.

Question 61

Where in a dependent-events sequence should an in-process quality inspection be placed? Why there?

Question 62

You have run a capacity resource profile on your shop.Products have been routed sequentially through resources A, B, C, and
C.A rope (communication) should be directed back to the start of the process, resource A, to prevent inventory from building up.Depending on the situation, a second rope can extend from the finished goods inventory location (another buffer) to resource C as described in the text.An excellent response to this question will include a diagram similar to Exhibit 23.9 and/or Exhibit 23.11.
C.A small buffer inventory should be held between resource B and resource
D.The capacity resource profile tells you that resource A is scheduled at 95 percent of capacity, resource B at 80 percent of capacity, resource C at 130 percent of capacity, and resource D at 100 percent of capacity.Assuming that the data we used to calculate the capacity resource profile are accurate, how would you employ the "drum, buffer, rope" thinking?
This concept is discussed in the text.The drum or control of the process is at the bottleneck, resource

Question 63

You have run a capacity resource profile on your shop.A process routes products sequentially through resources A, B, C, and
D.The capacity resource profile tells you that resource A is scheduled at 95 percent of capacity, resource B at 80 percent of capacity, resource C at 130 percent of capacity, and resource D at 100 percent of capacity.Assuming that the data we used to calculate the capacity resource profile was accurate, what have we discovered about the process A, B, C, and D? _________________________________________.

Question 64

What are the three financial measures of the firm's ability to make money?
(1) ______________________________.(2) ______________________________.(3) ______________________________.

Question 65

In Goldratt's approach to project management, what is the longest set of sequential tasks called? _____________________________________.

Question 66

In discussing batch size on an assembly line, the text makes the point that "one" and "infinity" are equally correct answers.How can this be?

Question 67

You have run a capacity resource profile on your shop.Products have been routed sequentially through resources A, B, C, and
D.The capacity resource profile tells you that resource A is scheduled at 95 percent of capacity, resource B at 80 percent of capacity, resource C at 130 percent of capacity, and resource D at 100 percent of capacity.Assuming that the data we used to calculate the capacity resource profile are accurate, what would we expect to find when we go out to the shop? ________________________________________________________.

Question 68

How many rules make up Goldratt's "rules of production scheduling?" ___________________________________.

Question 69

What are the three measurements in TOC that give guidance to the firm's operations?
(1) ______________________________.(2) ______________________________.(3) ______________________________.

Question 70

In a process sequence where a product flows from process A to process B, what is process B called? _______________________________________.

Question 71

What is the term that refers to the normal variation about a mean or average?

Question 72

Describe how cost accounting is sometimes antithetical to TOC?