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Ye ChengYe Cheng
Dept. of Industrial EngineeringDept. of Industrial Engineering
Tsinghua UniversityTsinghua University 1
Goal of the Firm
Providing
jobs
Produce
Consuming
high-quality materials
products
THE GOAL
OF A FIRM IS
TO MAKE
MONEY
Developing Increasing
technology sales
Increasing
market
share
Ye Cheng, Dept. IE, Tsinghua University Production Planning Control Lecture 14 Theory of Constraints 2
Performance Measurements of A Firm
• Net profit
Financial
• Return on investment
measurements
• Cash flow
• Throughput
Operational
• Inventory
measurements
• Operating expense
Productivity • All the actions the bring a
company closer to its goals
Ye Cheng, Dept. IE, Tsinghua University Production Planning Control Lecture 14 Theory of Constraints 3
Unbalanced Capacity
Manufacturers have tried to balance capacity
Unbalanced capacity is better
For a process line with several stations
Upstream stations take longer time down stream stations have idle time
Upstream stations take shorter time inventory builds up between stations
Cu
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