Which of the Following Statements Is NOT True About the Theory

question 4

Multiple Choice

Which of the following statements is NOT true about the theory of constraints (TOC) ?

• A) It was developed by Goldratt in his book "The Goal."
• B) Operations should help to increase sales, as long as capacity is available.
• C) Identifying the bottleneck in a process is critical for improving the overall flow through the process.
• D) Increased utilization of a non-bottleneck would improve the operating performance in a factory.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, due to fixed costs in a company's structure.

Net Income

This is the total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Variable Expenses

Costs that change in proportion to the level of activity or production volume.

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance.