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Hello. I’d really appreciate it if you can help me out with this question.
I’m having trouble calculating the time it take to produce one unit of each product to come up with the TA ratio.
Throughput per unit:
Product X = $80
Product Y = $80
Product Z = $200Production is restricted by process alpha, which is operational for 8 hours a day and can produce 1200 units of X per hour, 1500 units of Y per hour, and 600 units of Z per hour.
In the BPP book, all it says is this which I found confusing
X = $80x(60/0.05 mins)=$96,000
Y = $80x(60/0.04 mins)=$120,000
Z = $200x(60/0.10 mins)=$120,000
So how do you calculate the time per minute do divide the throughput return with?
Thank you in advance.
With throughput accounting we need to calculate the throughput return per hour (not per minute).
So, for product X, the throughput per unit is $80.
Since they can produce 1200 per hour, the time per unit is 1/1200 hours
So, the throughput per hour is 80 / (1/1200) = 80 x 1200 = $96,000.
(or in fact you could have said that since they produce 1200 per hour and each unit gives 80, then the total per hour is again 1200 x 80 = 96000)
So BPP’s answer is correct, but they have typed it in a very confusing way 🙂
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