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Dear Sir,
I have read the examiner’s article in ACCA website, BPP text book and your lecturer. But still not really fully understand about the concept of bottleneck resource. One of the theory that I don’t understand is in BPP passcard page 11. There are 5 production concepts:
1. JIT purchasing and production as much as possible
2. Use bottleneck resource to the full and as profitably as possible
3. Allow idle time on non-bottleneck resources.
4. Seek to increase availability of bottleneck resources.
5. When constraint on bottleneck resource is lifted and it’s no longer bottleneck, a different bottleneck resource takes over.
Is above concept refer to traditional cost accounting or TOC? Is traditional vs TOC really difference or got similarity? Perhaps you can give me example.Thank you so much.
What you have typed is referring to throughout accounting.
If products have to pass through several processes, then the slowest process will slow down the whole production – this is the bottleneck.
For example, suppose a company is making plates. First the material goes into one machine that makes the plate. Then the plates go into a second machine that paints them.
Suppose the first machine can make 20 plates per hour and the second machine can paint at the rate of 30 plates per hour. Even though the second machine is much faster, it can’t paint plates that have not been made. So they will only produce 20 painted plates per hour in total – the first machine is slowing things down and is therefore the bottleneck.
Suppose now that they find a way of making the first machine faster and it can now make 40 plates per hour. If the second machine can still only paint 30 per hour, then there is no point in making more plates than can be painted. Now they will produce 30 finished plates per hour, and it is now the second machine that is slowing everything down. The second machine is now the bottleneck.
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