Which of the following is TRUE about 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) recognizes that lowering inventory decreases carrying costs and thus decreases operating expenses and improves net income. TOC also emphasizes the importance of identifying and managing constraints in the production process to increase efficiency and throughput. EOQ (economic order quantity) is not a significant focus in TOC as it assumes a constant production rate and demand, while TOC recognizes the variability and uncertainty in both. Lower inventories may lead to increased defects or slower response time if not managed properly, but this is not a generalization recognized by TOC.

Which of the Following Is TRUE About the Theory of Constraints