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Hi,
The book states that throughput is a measure of performance not decision making.
Could you please elaborate on this? I really can’t get the logic.The other question is the following.
Units produced 500
Time taken 200h
Material purchased 1000kg,costing 3000$ material used 800kg.
Other info,,,,,,
the problems asks to calculate TARWhen I calculated I used material used, however in the answer material purchase figure is used? Why?
Thank you.
The TAPR itself is simply a measure (return per factory hour / cost per factory hour).
We can use it in decision making, but the figure itself is simply a measure.
The question shouldn’t really have confused by giving material purchases and material used. Strictly throughput does assume that we do not keep inventories of materials (i.e. a just in time approach) and therefore the materials will vary with the level of production (whereas all the other expenditure is fixed).
So, purchased and used should really be the same for throughput to be ‘perfect’ but if not then we do use purchases.One more question.
With the same logic when calculating sales, we should use units produced rather than units sold. Is that so? There is another question where units sold figure is used in calculations.
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