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Question 296 - CSCP discussion

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Which of the following objectives is a major principle of theory of constraints (TOC) accounting when applied to a supply chain?

A.
Total inventory reduction
Answers
A.
Total inventory reduction
B.
Maximize process utilization
Answers
B.
Maximize process utilization
C.
Maximize revenue generation
Answers
C.
Maximize revenue generation
D.
Product design simplification
Answers
D.
Product design simplification
Suggested answer: C

Explanation:

The Theory of Constraints (TOC) focuses on identifying and managing constraints (bottlenecks) within a process to optimize overall performance. In TOC accounting, the primary objective is to maximize throughput (revenue generation) by ensuring that the system's constraint is optimally utilized. This approach emphasizes the importance of increasing the rate at which the system generates money through sales while managing inventory and operating expenses effectively. Options A, B, and D are relevant to different operational strategies but do not capture the core principle of TOC accounting.

Goldratt, E. M., & Cox, J. (1984). The Goal: A Process of Ongoing Improvement.

https://www.tocinstitute.org/theory-of-constraints.html

asked 16/09/2024
John Bocachica
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