An improved theory of constraints

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.

Citation

Ray, A., Sarkar, B. and Sanyal, S.K. (2008), "An improved theory of constraints", International Journal of Accounting & Information Management, Vol. 16 No. 2, pp. 155-165. https://doi.org/10.1108/18347640810913816