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An improved theory of constraints

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Purpose ‐ The primary aim in this paper is to develop and demonstrate a theory of constraints (TOC) model in which constraint resource prevents the throughput of the organization. Design/methodology/approach ‐ In this paper, the authors propose an integrated model by combining Laplace criterion and TOC into a single evaluation model in a multiproduct constraint resource environment. A case study is illustrated to demonstrate the effectiveness of this model. The outsourcing decision model compares three alternatives: standard cost accounting, standard theory-of-constraints, and our own solution. Findings ‐ The numerical results show that the new approach is superior to Standard cost accounting and Theory of Constraints and presents a more realistic state of optimum allocation of resources and measures the performance of the model. Research limitations/implications ‐ This research is limited to the production processes that do not have multiple constraints. Originality/value ‐ This is the first time that the integrated model comprising of Laplace-TOC model has been used to maximize the product throughput. Instead of calculating $return per constraint minute, this method decides the priority of product that maximizes the product throughput in the constraint resource environment. It makes a significant contribution to the manufacturing Organization where one can compare the financial performance of the Organization by selecting the right decision model.
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Keywords: Outsourcing; Standard costs

Document Type: Research Article

Publication date: October 10, 2008

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