Data for a Factory -
the Theory of Constraints Has Its Own Special Definitions

question 46

Multiple Choice

Data for a factory
$\begin{array}{ll}\text { Total factory cost } & £ 10,000 \\\text { Total time au ailable on key resource (hours) } & 2,500 \\\text { Contribution per unit product A } & £ 34.00 \\\text { Contribution per unit product B } & £ 30.00 \\\text { Contribution per unit product C } & £ 22.00 \\\text { Contribution per unit product D } & £ 20.00 \\\text { Hours required product A } & 12.0 \\\text { Hours required product B } & 6.0 \\\text { Hours required product C } & 6.0 \\\text { Hours required product D } & 8.0\end{array}$

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The theory of constraints has its own special definitions

• A)Net profit = throughput - operational expense
• B)Net profit = throughput + operational expense
• C)Net profit = throughput - operational expense - fixed overheads
• D)Net profit = throughput - operational expense - variable overheads

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Definitions:

Rationing Coupons

Tickets or certificates that allow the holder to purchase a certain amount of a product or service, used especially in times of shortages to ensure equitable distribution.

Misallocation

The inefficient distribution or use of resources in an economy, often resulting from market failures or government intervention.

Resources

Assets, materials, and inputs needed for the production of goods and services, including time, labor, capital, and natural resources.

Excess Demand

A market condition where the quantity demanded of a good exceeds the quantity supplied, leading to shortages.