An improved theory of constraints

Amitava Ray, Bijan Sarkar and Subir Kumar Sanyal

International Journal of Accounting & Information Management, 2008, vol. 16, issue 2, 155-165

Abstract: 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.

Keywords: Standard costs; Outsourcing (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijaimp:v:16:y:2008:i:2:p:155-165

DOI: 10.1108/18347640810913816

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