The Theory of Constraints.
Title: The Theory of Constraints.
Category: /History/War & Conflicts
Details: Words: 1602 | Pages: 6 (approximately 235 words/page)
The Theory of Constraints.
Category: /History/War & Conflicts
Details: Words: 1602 | Pages: 6 (approximately 235 words/page)
Introduction.
Over the last 20 years, globalisation of economic activity has greatly intensified competition between manufacturers and this intensification has led many of them in search of new and innovative ways to increase their competitive edge. Constraint management (also known as TOC : Theory of Constraints) was one of the new systems that were introduced to help firms improve on their competitive standing. Furthermore, as the world advances, time becomes an even more important factor to companies.
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TOC may be appropriate.
In summary, TOC requires less data and effort than ABC and is far easier to implement and operate. However, it may not provide sufficient information to guide management decisions as opposed to ABC. Though it may not be true that the only variable cost is that of direct materials, the cost of actually allocating all costs such as labour and overhead to a product may outweigh the benefits of doing so.