Theory of constraints

Theory of constraints (TOC) is a body of knowledge on the effective management of (mainly business) organizations, as systems.

TOC consists of:

1. some basic concepts and principles,
2. the five thinking processes, and
3. their applications to various domains, such as:
   • managing manufacturing operations (synchronous manufacturing),
   • project management (critical chain),
   • accounting and performance measurement (throughput accounting).

All real-world systems have at least one constraint; otherwise they would be capable of infinite throughput, which is clearly impossible. TOC claims that a real-world system with more than three constraints is extremely unlikely. This claim is based on linear programming models, which are capable of solving optimization problems for systems with many hundreds of constraints. Researchers found that all but a few such solutions were so unstable that they would be completely impractical amid the noise of a real-world system. The stability had a strong correlation to the number of constraints in the problem; the more constraints, the less stability. TOC practitioners claim that in practice three constraints is the realistic maximum. A major implication of this is that managing a complex system or organization can be made both simpler and more effective, by providing managers with a few specific areas on which to focus.

TOC has been initiated by Eliyahu M. Goldratt and is being actively developed by a loosely coupled community of practicioners around the world.

TOC is sometimes referred to as "Constraint Management".

See also

• List of theory of constraints topics
• throughput
• constraint
• Donella Meadows' twelve leverage points to intervene in a system

External links

• Focused Performance website and weblog
• Goldratt Institute web site