Theory of Constraints

The Theory of Constraints (TOC) is an operations management philosophy introduced by Eliyahu M. Goldratt in his 1984 book 'The Goal', which argues that the total throughput of any production or service system is capped by its slowest resource — the constraint or bottleneck. The core of TOC is the Five Focusing Steps algorithm: (1) Identify the system constraint, (2) Exploit the constraint by extracting maximum useful work from it, (3) Subordinate all other resources to the constraint's pace, (4) Elevate the constraint by adding or improving capacity, and (5) do not let inertia become the next constraint — return to step one. A production or operations manager applies TOC by directing investment to the actual bottleneck workstation rather than speeding up non-bottleneck stations that would merely accumulate work-in-process inventory without adding throughput. TOC gave rise to the Drum-Buffer-Rope scheduling logic and the Throughput Accounting model. From an operations research perspective TOC connects directly to #001 job-shop scheduling and #044 aggregate production planning; the bottleneck resource corresponds to the binding constraint with the highest shadow price in the dual of a linear programming model. Reference: Goldratt and Cox (1984) 'The Goal'.