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An improved theory of constraints


Article Information:

Title:

 An improved theory of constraints

Author(s):

Amitava Ray, Bijan Sarkar, Subir Kumar Sanyal

Journal:

International Journal of Accounting and Information Management

Year:

2008 

Volume:

16 

Issue:

2 

Page:

155 - 165


DOI:

10.1108/18347640810913816

Publisher:

Emerald Group Publishing Limited


Acknowledgements:

The authors are very appreciative for the thoughtful and constructive comments made by the anonymous reviewers of this paper.

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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:

Outsourcing, Standard costs

Article Type:

Case study

References:

34 references

Article URL:

www.emeraldinsight.com/10.1108/18347640810913816

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