MG 211 Lecture Notes - Lecture 9: Operations Management, Operating Expense, Absenteeism

• School: Quinnipiac University
• Department: Management
• Course: MG 211
• Professor: Saravanan Kuppusamy

Document Summary

The theory of constraint: a systematic management approach that focuses on actively managing those constraints that impede a firms process toward its goal. The focus should be on balancing flow not on balancing capacity. Maximizing the output and efficiency of every resource may not maximize the throughput of the entire system. An hour lost at a bottleneck or constrained resource is an hour lost for the whole system: an hour saved at a non-bottleneck resource does not make the system more productive. Inventory is needed only in front of bottlenecks and in front of assembly and shipping points. Work should be released into the system only as frequently as needed by the bottlenecks: bottleneck flows = market demand. Activating a non-bottleneck resource is not the same as utilizing a bottleneck resource: it doesn"t increase throughput or promote better performance. Every capital investment must be viewed from the perspective of the global impact on overall throughput, inventory, and operating expense.