CHAPTER05%20FINAL%20DRAFT_Student

CHAPTER05%20FINAL%20DRAFT_Student - Chapter 5 Theory of...

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Unformatted text preview: Chapter 5 Theory of Constraints What You Will Find Out About in This Chapter The importance of managing system throughput The differences between cost-world orientation and throughput orientation The importance, and often the difficulty, of identifying constraints The five-step process of constraint management The circumstances in which the theory of constraints is valuable in increasing throughput How throughput accounting and appropriate performance measures can encourage a throughput emphasis Management Accounting for Change: Process Improvement and Innovation 84 5.1 INTRODUCTION ...........................................................................................................................................85 5.2 MANAGING PROCESS THROUGHPUT ....................................................................................................85 5.2.1 Defining TOC ...........................................................................................................................................86 5.3 NATURE OF THE GLOBAL GOAL VS LOCAL PERFORMANCE MEASUREMENT ........................87 5.3.1 The Global Goal .......................................................................................................................................87 5.3.2 Local Performance Measurement .............................................................................................................87 5.3.3 Conflicts Between Local Performance and the Global Goal ....................................................................87 5.3.4 Traditional Accounting Measures - Incentives to Create Inventory .........................................................89 5.4 NATURE AND CONSEQUENCES OF CONSTRAINTS ............................................................................91 5.4.1 External Constraints .................................................................................................................................92 Market Constraints ........................................................................................................................................92 Supply Constraints ........................................................................................................................................92 5.4.2 Internal Constraints ..................................................................................................................................93 Material Constraints ......................................................................................................................................93 Capacity Constraints .....................................................................................................................................93 Logistical Constraints ....................................................................................................................................93 Managerial Constraints .................................................................................................................................93 Managerial Constraints ....
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CHAPTER05%20FINAL%20DRAFT_Student - Chapter 5 Theory of...

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