Optimized Production Technology (OPT)

```Optimized Production Technology
(OPT)
Prepared by
Clint Ward
Brigham Young University
A Brief Overview
OPT Defined
Importance
Operational
Measures
Goal of OPT
Brainstorming
Activity
Nuts &amp; Bolts
Real World
Example
Rules of OPT
Exercise
OPT Defined
• Optimized Production Technology is a
planning &amp; production system focused on
throughput maximization by alleviating
bottlenecks
(Precursor to Theory of Constraints)
Why is OPT important?
“A chain is no stronger
than its weakest link”
An organization can only
speed up the length of
the entire process if
the bottleneck is
alleviated
OPT Operational Measures
• Throughput = “the rate at which the system
generates money through sales”
• Inventory = “all the money that the system
has invested in purchasing things which it
intends to sell”
• Operational Expense = “all the money the
system spends to turn inventory into
throughput”
The Goal of OPT
“Increase throughput
while simultaneously
reducing both
inventory and
operational expense”
Brainstorming Exercise
• Pull out a piece of paper
• Identify all of the area or processes on the
floor
• Jot down bottlenecks
– Take 3-4 minutes; allow more time if needed to
visit floor and find bottlenecks
OPT Nuts &amp; Bolts
Dependent Events: all processes count on the
completion of sequential operations
Statistical Fluctuations: process times
fluctuate around an average
Due to these facts, a plant’s capacity must be
unbalanced and bottlenecks are inevitable
OPT Nuts &amp; Bolts (cont.)
First,
Third,
Identify bottlenecks
Shift work off of
bottlenecks and give it
Second,
Increase capacity of bottlenecks to non-bottlenecks
by minimizing machine idle
time, avoid processing
defective parts, avoid
processing outside current
demand
Obstacles
1. Knowing what to change
2. What to change to
3. How to institute the change
Real World Example: Dow Corning Corporation
“Our plant’s on-time delivery was 50% and we were
carrying over 100 days of inventory. We had six
months to turn things around. Within my unit we
identified the bottleneck and began to focus our
resources there. By the time the six months were
up, we had started to make significant changes
using ‘The Goal’ as a reference. When I left the
department cycle time had reduced 85%, operator
headcounts reduced 35% through attrition, WIP
were down 70%. On-time delivery was increased
to 90%.”
-The Goal by Eli Goldratt
Ten Rules of OPT
1. Utilization and activation of a resource are
not the same
2. The level of utilization of a non-bottleneck
is determined not by its own potential but
by some other constraint in the system
3. An hour lost at a bottleneck is an hour lost
for the total system
Ten Rules of OPT
4. An hour saved at a non-bottleneck is just a
mirage
5. Bottlenecks govern both the throughput and
inventory in the system
6. The transfer batch may not and often
should not be equal to the process batch
7. The process batch should be variable, not
fixed
Ten Rules of OPT
8. Capacity and priority should be considered
simultaneously, not sequentially
9. Balance flow, not capacity
10. The sum of local optima is not equal to the
global optimum
Break-out Exercise
• Pull out your brainstorm lists of bottlenecks
• Gather in groups of 3-4
• Round-robin through everyone’s lists
(3 min)
• Everyone pick 1 bottleneck (should have
duplicates) and jot down ways to increase
capacity
• Discuss effects of the changes
Summary
• Any process can be improved!
• Focus on the bottlenecks!
• Identify ways to increase bottleneck
capacity!
• Never forget the goal: “Increase throughput
while simultaneously reducing both
inventory and operational expense”
• Ellram, L., Fawcett, S., Ogden, J. (2007), Supply Chain Management,
Pearson Education, Inc., Upper Saddle River, New Jersey.
• Goldratt, E., Cox, J. (2004), The Goal, North River Press,
Great Barrington, MA.
• http://blog.jackvinson.com/archives/2010/12/20/the_rules_of_opt__precursor_to_theory_of_constraints.html
• http://bulatov.org.ua/teaching_courses/logistics_files/Logistics%20Lec
2%20OPT.pdf
• http://en.wikipedia.org/wiki/Eliyahu_M._Goldratt
• http://www.angelfire.com/ca2/jlui/thegoal.html
• http://www.blackwellreference.com/subscriber/uid=1129/tocnode?id=
g9780631233176_chunk_g978140511096919_ss7-1
• http://www.tangram.co.uk/TI-Glazing-Manstrat_04.html
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