What are the five steps behind the Theory of Constraints methodology and what takes place in each?

What will be an ideal response?


The five steps in TOC methodology are to: identify the system constraint; exploit the system constraint; subordinate everything else to the system constraint; elevate the system constraint; and determine if a new constraint has been uncovered; then repeat the process. In order to identify the constraint, an intensive search must be made to uncover the root cause that limits the output of the system. To exploit the constraint, a strategy of focusing and viewing all activities in terms of this constraint is necessary; the firm must put the constraint to its best use before any other resource is considered. Subordination of the system requires resource commitment or scheduling decisions after handling the needs of the root constraint. The fourth step, elevating the constraint, seeks to improve the system by mitigating the effect of this bottleneck. If in fact, the constraint has been broken, then a new one has emerged. This new constraint throws the organization into the next cycle of identification, exploitation, subordination, and elevation.

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In the ATM model, the demand for money depends on

A. the nominal interest rate and the money supply. B. the nominal interest rate and the ongoing rate of inflation. C. the nominal interest rate, the cost of obtaining cash, the probability of loss or theft, and the money supply. D. the nominal interest rate, the cost of obtaining cash, the probability of loss or theft, and the amount of spending.

Business

In a common-size income statement, each item is expressed as a percentage of net sales

Indicate whether the statement is true or false

Business

A compromising negotiation style is a competitive approach to reaching an agreement

Indicate whether the statement is true or false.

Business

Erie Company reports the following comparative balance sheets and income statement information for the current year. Comparative Balance Sheets 12/31/201512/31/2016Assets        Cash $96,000?  $ 56,000 Accounts receivable  40,000?   24,000? Prepaid insurance  40,000?   48,000? Inventory  16,000?   32,000? Property, plant & equipment  48,000?   56,000? Total Assets $ 240,000  $216,000?          Liabilities and Stockholder's Equity        Accounts payable $ 56,000  $40,000? Salaries payable  24,000?   48,000? Long-term notes payable  32,000?   40,000? Common stock  28,000?   28,000? Retained earnings  100,000?   60,000? Total Liabilities and Stockholders'

Equity $ 240,000  $216,000? 2016 Income StatementRevenue$320,000?  Cost of goods sold (168,000)? Gross margin 152,000?  Operating expenses (88,000)? Net income$64,000?  What was the cash received from customers during the year?  A. $280,000 B. $336,000 C. $296,000 D. $320,000

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