What is the theory of constraints?
A)TOC recognizes that EOQ is important.
B)TOC recognizes that lowering inventory decreases carrying costs and thus decreases operating expenses and improves net income.
C)TOC recognizes that lower inventories mean more defects.
D)TOC recognizes that lower inventories mean slower response to customers.

Question

Quizplus · Accepted Answer

The Theory of Constraints (TOC) posits that within any manufacturing or production process, there is a limiting factor (constraint) that determines the overall performance of the system. By identifying and improving this bottleneck, the process can be made more efficient. TOC suggests that lowering inventory levels can decrease carrying costs, which in turn reduces operating expenses and improves net income, without necessarily implying that it leads to more defects or slower customer response as might be suggested by options C and D.

What Is the Theory of Constraints