Theory of constraints - part 3
Taught by Nick Drape · AI tutor support included
You'll learn how to calculate the throughput accounting ratio—a key metric in theory of constraints that shows whether a product generates cash faster than it costs the business to produce it.
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Throughput accounting ratio explained
- 1:00 Step one: Calculate return per factory hour
- 1:44 Step two: Calculate cost per factory hour
- 3:03 Interpreting the throughput accounting ratio
- 3:57 Strategies to improve throughput accounting ratio
- 6:02 Evaluating each improvement strategy
- 8:49 Theory of constraints framework recap
- 10:54 Key throughput accounting measures summary
About this lesson
This video walks you through a practical worked example, calculating return per factory hour and cost per factory hour, then interpreting what a ratio below 1.0 means for your product strategy. You'll also explore four proven ways to improve a weak throughput accounting ratio: increasing selling price, reducing material costs, speeding up bottleneck production time, or cutting labour costs. This is essential for Performance Management and strategic decision-making in a just-in-time environment.
Duration: 12m
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the P2 Objective Test course
All 121 video lessons, timed mock exams marked instantly with an explanation for every question, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in