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Hi John,
This is with reference to the article on ACCA website on Throughput accounting and theory of constraints part 2, Example 2. In the calculation of Financial Viability of the three options, how do they find out the additional sales unit. Thanks in advance!The most they can produce is determined by the capacity of the slowest machine (the bottleneck).
At present, the slowest machine is Z and so they can produce 500.Therefore they will look to how they can make Z faster. They can do this by Purchase 3, which will increase the capacity to 1,050. However this will not change X and Y, so the slowest machine is now Y and so they can produce 600.
So not they need to look at how they can make Y faster. They can do this by Purchase 2 and invest in s second machine Y and increase its capacity by 550, to a total of 1,150 units.
The slowest machine is now X and so the can produce 800.
So not they look at how they can make X faster. They can do this by Purchase 1 and replacing X. This will increase capacity to 1,100 units. So now the slowest machine is X and they can produce 1,050 units. However, since the demand is only 1,000 units, they will only end up producing 1,000 units.
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