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Unformatted text preview: Theory of Constraints All companies have certain aspects of their business that create “bottlenecks''—constraints that limit the company's potential profitability. An important aspect of managing the value chain is identifying these constraints. The theory of constraints is a specific approach used to identify and manage constraints in order to achieve the company's goals. Automobile manufacturer General Motors has implemented the theory of constraints in all of its North American plants. GM has found that it is most profitable when it focuses on fixing bottlenecks, rather than worrying about whether all aspects of the company are functioning at full capacity. It has greatly improved the company's ability to effectively use overtime labor while meeting customer demand....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.
- Fall '11