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The following statements have been made about throughput accounting
1.A principle of throughput accounting is that buffer inventory should be built up for output from bottleneck resource2.Unless output capacity is greater than sales demand,there shall always be a binding constraint
Which of these statements are true??
Answer given is :statement 2 onlyPlease explain teacher..
As I state in my free lectures, inventory should be kept to a minimum – therefore statement 1 is wrong. They should not keep buffer inventory.
Statement 2 is correct because the problem of a bottleneck resource only occurs when the production is limited (even though they would have been able to sell more if they had been able to produce more).
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