Throughput accounting

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September 4, 2017 at 6:56 pm #405499
bayu
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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 resource

2.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 only

Please explain teacher..
September 5, 2017 at 7:30 am #405568
John Moffat
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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).
September 5, 2017 at 8:43 am #405587
bayu
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So cant sales demand be a binding constraint??
September 5, 2017 at 2:35 pm #405645
John Moffat
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Not in throughput accounting, no. Throughput accounting is only with regard to production limits.

Do watch my free lectures on this 🙂
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