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Topic: |
Business
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Number of pages / Number of words: |
7 / 1695 |
Essay's paper body
TOC is an on-going process, and the inertia that can build up after a change occurs can actually serve to prevent continuous improvement.
Goldratt also provides a foundation for achieving change through TOC by defining a set of three essential measurements that drive the change process. He correctly realized that conventional accounting systems do not support TOC, or lean-based efforts...
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He correctly realized that conventional accounting systems do not support TOC, or lean-based efforts. Goldratt proposes replacing all traditional measures derived from the "product cost" accounting paradigm. The following measures are the only way to increase profit through TOC:
Throughput
The rate at which the entire organization generates money through sales for a product or service...
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General points of the essay
Activity Based Costing and the Theory of Constraints are, respectively, Overhead Absorption Costing and Marginal Costing in a different guise
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