The Theory of Constraints

1. Introduction

The Theory of Constraints (or TOC as it is called) is a relatively recent development in the practical aspect of making organizational decisions in situations in which constraints exist.
Premise: In every organization there is at least one constraint - anything that limits the ability of a system to achieve its goal.
Dr. Eliyahu M. Goldratt first described the theory in his novel, The Goal. In many organizations, TOC and TOC logic form major portions of that organization's philosophy of continuous improvement.

The Theory of Constraints has been used at three different levels:
a) Production Management - TOC was initially applied here to solve problems of bottlenecks, scheduling, and inventory reduction.
b) Throughput Analysis - Application of TOC has caused a shift from cost-based decision making to decision-making based on continuous improvement of processes in which system throughput, system constraints, and statistically determined protective capacit...