Throughput accounting and stochastic system behaviour: importance of low throughput products
AbstractNearly for two decades, throughput accounting has argued against practices of management accounting. It has built mainly its alternative theory on simple and static example of choosing right product mix to maximize profitability of a manufacturing unit. In this research work, we simulate original throughput accounting product mix problem and use stochastic variation in the production process phases and in the end product demand. Results show that variation creates situation, where system profits increase significantly; this is mostly caused by the reason that we have enough WIP in the process, constraint resource is having occasionally lower cycle-times and un-favoured low throughput product is being produced due to the reason that there does not exists that high demand high yield one. Based on these findings, we propose that throughput accounting theory should be modified – variability in some situations and with low throughput products is the main factor for higher profitability.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Inderscience Enterprises Ltd in its journal Int. J. of Applied Management Science.
Volume (Year): 1 (2008)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.inderscience.com/browse/index.php?journalID=286
throughput accounting; stochastic processes; system dynamics; simulation; cycle times; work-in-process; WIP; low throughput; variability; manufacturing.;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Lauri LÃ¤ttilÃ¤ & Olli-Pekka Hilmola, 2012. "Forecasting long-term demand of largest Finnish sea ports," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 4(1), pages 52-79.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Graham Langley).
If references are entirely missing, you can add them using this form.