The Third Step in Theory of Constraints Application, "Subordinate All

question 3

Multiple Choice

The third step in Theory of Constraints application, "subordinate all other decisions to Step 2," means that the analyst should:

• A) wait for authorization before proceeding with any system-wide changes.
• B) schedule non-bottleneck resources to support the bottleneck schedule.
• C) seek to increase capacity of only the bottleneck resources.
• D) seek to increase capacity of both the bottleneck and non-bottleneck resources.

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Definitions:

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are close substitutes, leading to price competition.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefits to society.

Benevolent Social Planner

A hypothetical figure in economics who makes decisions aimed at achieving the best possible outcomes for society overall, considering both efficiency and equity.

Market Power

The ability of a firm or group of firms to significantly control or influence market prices, often due to lack of competition.