Throughput Accounting and the Theory of Constraints

THROUGHPUT ACCOUNTING AND THE THEORY OF CONSTRAINTS
A Summary of Goldratt's Argument
During the 1970's Eli Goldratt developed a new approach to production management which he called Optimised Production Technology (OPT). This approach provided a logical analysis of manufacturing issues and argued that in order to increase the throughput (defined as sales less material costs) of a plant, production managers needed to identify and focus attention upon the ultimate constraint of a plant's output. This is often described as a bottleneck. This bottleneck resource must be distinguished from n…