Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 30

According to the theory of constraints, what are the ways to increase profits?

Step 1 of 6

Theory of Constraints (TOC):

Theory of Constraints is a specialized field of study that is concerned with "limits or constraints" which come in the way of the organization's ability to accomplish its goals. The basis for the Theory of Constraints is a five step process to manage these limitations. Some of these constraints can be:

• Raw material availability

• Vendor capabilities

• Machine capacities

• Working capital shortage

• Skill sets of employees

• Market demand and so on.