Theory of Constraints, Accounting HW

Find an example of a significant bottleneck (constraint) in any organization that you are familiar with and explain how you can apply the Theory of Constraints to solve the bottleneck.

1. 1. Be Clear and Succinct
   2. Make sure you identify the Bottleneck
   3. Make sure you identify the steps you are taking

Select appropriate example

5

Clearly Identify the Bottleneck

5

Suggest ways to apply the TOC

10

Possible Points

20

Theory of Constraints – A method for bringing about continuous improvement

 Movie Notes

TOC Steps

1. Identify the Bottleneck/constraint
2. Exploit the Bottleneck/binding constraint
3. Subordinate everything else to the decision made in step #2
4. Elevate the binding constraint/Bottleneck
5. Go to step #1

Throughput – the rate at which an organization generates money through SALES

(Throughput = Sales – Unit level variable costs.  Direct Labor is treated as fixed.)

Inventory is all of the money the company spends turning materials into throughput.

Operating expenses are defined as the money the organization spends to turn inventory into throughput.

 The HW is due in 8 hrs if you cant do it please dont send a handshake