Sir if machinery is a bottleneck resource (with limited hours) then does increasing the number of hours of machinery(by buying a new machinery) increase TPAR?
I understand that Total throughput return of factory will increase, throughput return per unit will still remain constant but am not sure about TPAR.
TPAR should increase as Throughput return per unit will remain constant, but as total bottleneck time available will rise, costs per factory hour will fall. But I was wondering if production fixed costs such as depreciation charges arising from purchase of new machinery, possibly negate the effects of increased hours and cause the costs per factory hour to rise?
More factory hours available will reduce the cost per hour. Higher factory costs will increase the cost per hour. The overall effect will depend on the hours and the cost.