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In Throughput accounting how should i rank a product or which way is the best approach for ranking from this two :
1) throughput per bottleneck resource
or
2) throughput accounting ratiowhen there are different factory cost available for different product, then what would be the best approach for ranking the product
1) throughput per bottleneck resource
or
2) throughput accounting ratioIn a proper throughput accounting question then there cannot be different factory costs for different products – the whole point is that the products are sharing the same factory.
Ranking according to the throughput return per bottleneck hour, and ranking according to the TAR will always be the same ranking.
I do suggest that you watch my free lectures on throughput accounting.
Our free lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.
Hello sir, ive got a question, given that process is expected to take 8 hours per day and can produce 1200 units per hour. Throughput per unit is 80 and cost per factory hour is 90000. How to calculate throughput accounting ratio please. Thank you
Each unit takes 1/1200 hours.
Therefore the throughput return per hour = 80 / (1/1200) = $96,000.
The cost per factory hour = $90,000.
Therefore the TAR = 96,000 / 90,000 = 1.07
Dear John,
I am sorry but I don’t understand where the $96000 came from?
I’m getting 9.6 when performing your calculation
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