| MTS – Make-to-Stock |
MTS – make-to-stock is to produce just in case, mostly based on forecast of selling most demanded products. It happens when the market is not willing to wait until the order is manufactured and expects to buy “from stock”, hence the production starts without a firm order from a specific customer. There are also situations […] |
| MTO – Make-to-Order |
A system based on customers’ orders (specific) while accepting response time that includes the production time. Customers place orders for products with quantities and delivery dates. Usually the delivery dates are fixed by policy or by agreement with customer service department. Source: Oded Cohen and Jelena Fedurko, Theory of Constraints Fundamentals, 2012 |
| Boundaries of Production Management |
All activities associated with managing a flow of the order from the release of materials to the shop floor until it is ready to be shipped to the customers. Source: Oded Cohen and Jelena Fedurko, Theory of Constraints Fundamentals, 2012 |
| Production Management, Boundaries |
All activities associated with managing a flow of the order from the release of materials to the shop floor until it is ready to be shipped to the customers. Source: Oded Cohen and Jelena Fedurko, Theory of Constraints Fundamentals, 2012 |
| DIOH – Days Inventory On Hand |
The conversion of monetary value of inventory to time is done by using the term called DIOH. “A day” in this conversion means the value of average day of sales. For a TOC calculation we use the average daily sales in terms of the purchasing price of the materials or even better – in terms […] |
| Inventory turns [the TOC Way] |
Inventory turns (the TOC Way) – is a measurement to reflect the amount of sales over a period of time (like one year) that are generated per one unit of money (like $1) invested in Inventory. The higher the inventory turns the better is the use of the money. Inventory turns the TOC Way = […] |
| Operating Expenses (OE) |
All the money that the system spends in turning Investment in Throughput. OE are the periodical amount of expenses spent by the organization. These are the expenses that do not vary with a single sale. OE includes all the money that is paid out and cannot be directly associated with a specific product or specific […] |
| Inventory [the TOC Way] |
Inventory the TOC Way – is a part of the Investment. Inventories are recorded at the purchasing prices (at RM prices, price of components or goods for resale), without added value due to internal processes and without overhead absorption. Source: Oded Cohen and Jelena Fedurko, Theory of Constraints Fundamentals, 2012 |
| Return on Investment (ROI) the TOC Way |
Periodic T, I and OE are used in order to assess the ROI of the company through the use of the formula: ROI=NP/I = (T-OE)/I When judging the incremental impact of a decision that contains additional investment the marginal ROI is calculated through the formula: Marginal ROI = ∆NP/∆I = (∆T-∆OE)/∆I Source: Oded Cohen […] |
| Investment (I) |
Investment (I) – all the money the system invests in purchasing things it intends to sell. Investment includes Inventories that are recorded at the purchasing prices (at RM prices, price of components or goods for resale), without added value due to internal processes and without overhead absorption. Return on Investment ( ROI) the TOC Way […] |
| TVC – Totally/Truly Variable Cost |
TVC conceptually is a new term and differs in its content from the content of the conventional term “variable cost”. TVC is the cost of raw materials, components and direct paid services for production of products to be sold or the cost of products bought for reselling. TVC is the cost that grows directly proportionally […] |
| Throughput (T) |
For commercial organizations Throughput is defined as: The rate at which the system generates money through sales. Throughput is the difference between the selling price (P) and the Totally Variable Cost (TVC). T = P – TVC For non for profit organizations Throughput is defined as: The rate at which the organization generates goal units. […] |
| Procedures and Reports in Injection Implementation |
Technical Procedures and Reports – Management needs to get information about the progress of the orders. Some of the injections are activated through technical procedures – usually with the help of IT programs. Managerial Procedures and Reports – establish what decisions and actions should be taken by management in order to ensure on-time delivery. Many […] |
| Injection Implementation – Procedures and Reports |
Technical Procedures and Reports – Management needs to get information about the progress of the orders. Some of the injections are activated through technical procedures – usually with the help of IT programs. Managerial Procedures and Reports – establish what decisions and actions should be taken by management in order to ensure on-time delivery. Many […] |
| U-shape |
A concept of organizing the TOC knowledge in a comprehensive logical diagram of TOC entities that participate in the analysis of the current reality and the construction or usage of the solution to create an improved future reality. The U-shape was established to organize, store and easily retrieve the TOC knowledge. The U-shape is used […] |
| Managerial flows within a system |
Process Flow – the flow of materials or documents that generates the Throughput of the system. Information flow – contains all the relevant data that is flowing from the Process (Throughput) flow to the workforce and to the management the and gives indication about the progress or difficulties of the Process Flow. Decision Flow – […] |
| Types of managerial flows within a system |
Process Flow – the flow of materials or documents that generates the Throughput of the system. Information flow – contains all the relevant data that is flowing from the Process (Throughput) flow to the workforce and to the management the and gives indication about the progress or difficulties of the Process Flow. Decision Flow – […] |
| Injection Flower |
In system change – the Injection is a new feature or a new managerial procedure that replaces an existing procedure or an existing feature that according to our analysis are responsible for the gaps in performance (UDEs – Undesirable Effects). The Injection has a special role in the design of the TOC solution. Solutions of […] |
| Injection |
In system change – the Injection is a new feature or a new managerial procedure that replaces an existing procedure or an existing feature that according to our analysis are responsible for the gaps in performance (UDEs – Undesirable Effects). The Injection has a special role in the design of the TOC solution. Solutions of […] |
| Five Focusing Steps |
1. Identify (choose) the system’s constraint. 2. Decide how to exploit the system’s constraint. 3. Subordinate everything else to the above decision. 4. Elevate the system’s constraint. 5. If the constraint is broken go back to step one but do not allow Inertia to cause the system’s constraint. Source: Oded Cohen and Jelena Fedurko, […] |