A simulation‐based comparison of TOC and traditional accounting performance measures in a process industry

Abstract

Purpose

Aims to compare performance measurement of a continuous process manufacturing operation under two accounting systems – a traditional cost accounting system and the theory of constraints (TOC) system.

Design/methodology/approach

Using a computer‐based simulation methodology to capture operational performance, it is found that the TOC‐based accounting system presents a more realistic state of performance scenario.

Findings

Findings from this research indicate that businesses using a TOC‐based system can improve their performance more accurately, and hence gain a sustainable competitive position in the future.

Research limitations/implications

This research is limited to continuous process manufacturing operations.

Originality/value

The research makes a significant contribution to the knowledge of performance measurement.

Citation

Mehra, S., Inman, R.A. and Tuite, G. (2005), "A simulation‐based comparison of TOC and traditional accounting performance measures in a process industry", Journal of Manufacturing Technology Management, Vol. 16 No. 3, pp. 328-342. https://doi.org/10.1108/17410380510583635