Throughput vs Throughput/hr

This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.

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August 21, 2020 at 10:55 am #581392
Holmes1308
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Dear Sir,
Throughput can increase when a bottleneck resource becomes a non-binding constraint, but our throughput per factory hr wouldn’t increase right? It will still remain the same. as our throughput will increase so will the hours so there will be a corresponding change in numerator and denominator at the same time. am i right sir??
with best regards,
August 21, 2020 at 1:14 pm #581407
John Moffat
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No, that is not correct.
The throughput per hour is the throughput (selling price less material cost) per unit divided by the hours per unit. If they are able to produce more then the denominator will increase but the numerator is not changed.
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