On which three operation measures of system performance does theory of constraints focus?
A)inventory,throughput,and loose constraints
B)throughput,operating expenses,and product mix
C)throughput,inventory,and operating expenses
D)throughput,operating expenses,and contribution margin

Question

Quizplus · Accepted Answer

The theory of constraints focuses on three measures of system performance: throughput (the rate at which the system generates money through sales), inventory (the money the system has invested in purchasing things it intends to sell), and operating expenses (the money the system spends in order to turn inventory into throughput). Therefore, option C is the correct answer. Option A is incorrect because loose constraints are not a measure of system performance. Option B is incorrect because product mix is not a measure of system performance. Option D is incorrect because contribution margin is not one of the three measures of system performance focused on by the theory of constraints.

On Which Three Operation Measures of System Performance Does Theory