15and16_OverheadsFor - What are constraints Why do we care How do constraints affect decisions control systems Theory of constraints Analyze LOTS

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ACCY 302 (Chen) Objectives for today and next class What are constraints? Why do we care? How do constraints affect decisions & control systems? Theory of constraints Analyze LOTS of situations to identify constraints and their impact on decisions
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ACCY 302 (Chen) Constraints What are they? Limitations in resources or demands Internal. ..e.g.: total capacity in units bottlenecks in production limitations on inputs (labor hours, machine hours, scarce raw materials) External. ..e.g.: market demand: total units total dollars uncertainty (risk!)
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Constraints  (continued) Why do we care? 1) Remember relevance? loose vs. binding constraints 2) To act in the best interest of the principal, the agent should: select the decision alternative with the greatest net benefit to the firm. .. ...based on the existing resources and economic
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This note was uploaded on 11/08/2011 for the course ACCY 302 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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15and16_OverheadsFor - What are constraints Why do we care How do constraints affect decisions control systems Theory of constraints Analyze LOTS

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