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Hi sir,
I got confused between these two concept.How do I know what to choose between two methods (throughput or limiting factor) when calculate an optimum production plan?
If I use throughput concept, the priority will be based on TP contribution(SP-DM).
However, if I use limiting factor concept, will use contribution.Will questions state clearly that which concept should be used?
Thanks 🙂
It will be clear from the question.
Either it will specifically ask you to use throughput accounting, or alternatively the limited factor will be something other than machine hours. Throughput accounting is only applicable if the limiting factor is machine hours – if it is anything else then it is normal key factor analysis.
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