An improved theory of constraints

Abstract

PurposeThe primary aim in this paper is to develop and demonstrate a theory of constraints (TOC) model in which constraint resource prevents the throughput of the organization.Design/methodology/approachIn this paper, the authors propose an integrated model by combining Laplace criterion and TOC into a single evaluation model in a multiproduct constraint resource environment. A case study is illustrated to demonstrate the effectiveness of this model. The outsourcing decision model compares three alternatives: standard cost accounting, standard theory‐of‐constraints, and our own solution.FindingsThe numerical results show that the new approach is superior to Standard cost accounting and Theory of Constraints and presents a more realistic state of optimum allocation of resources and measures the performance of the model.Research limitations/implicationsThis research is limited to the production processes that do not have multiple constraints.Originality/valueThis is the first time that the integrated model comprising of Laplace‐TOC model has been used to maximize the product throughput. Instead of calculating $return per constraint minute, this method decides the priority of product that maximizes the product throughput in the constraint resource environment. It makes a significant contribution to the manufacturing Organization where one can compare the financial performance of the Organization by selecting the right decision model.