Unit 6_MT434_Discussion response

13647Respond or elaborate on the response below:

Theory of constraints was invented by Eliyahu M. Goldratt in 1980-s. The theory states that in every process there is at least one “constraint” or “bottleneck”, which restricts the performance of the entire system (Goldratt, 1990). It is significant for the managers, as they help to focus on the key element, which lowers the potential of the whole process. By improving or removing that constraint, it is possible to significantly improve the system’s productivity.

Comparison to Total Cost Analysis

Total cost analysis, by definition, is a holistic approach to analyze all supply chain costs such as transportation, warehousing and inventory, and use it to make supply chain decisions (Langley et al., 2020). The main difference between the two methodologies is that TOC aims to improve flows by removing bottlenecks, while total cost analysis concentrates on cost optimization by finding tradeoffs. For example, while TOC would pose a question “What is slowing us down?” a total cost analysis would rather ask a question “Where can we spend less, without changing the overall objectives?“

Comparison to Optimization

Optimization is a process of searching for the best possible answer using analytical models and data. It scans multiple potential solutions and selects the one that offers the highest yield (Chopra & Meindl, 2019). The difference between the two is that TOC is much simpler and designed to look at one particular problem at a time, while optimization aims to find a sweet spot of all variables. These concepts are similar, as TOC presents an actionable way of step-by-step improvement, and optimization allows taking a “bird’s view” of a process using quantitative data.