IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v121y2009i1p121-129.html
   My bibliography  Save this article

Theory of constraints and the combinatorial complexity of the product-mix decision

Author

Listed:
  • Linhares, Alexandre

Abstract

The theory of constraints (TOC) proposes that, when production is bounded by a single bottleneck, the best product mix heuristic is to select products based on their ratio of throughput per constraint use. This, however, is not true for cases when production is limited to integer quantities of final products. Four facts that go against current thought in the TOC literature are demonstrated in this paper. For example, there are cases in which the optimum product mix includes products with the lowest product margin and the lowest ratio of throughput per constraint time, simultaneously violating the margin heuristic and the TOC-derived heuristic. Such failures are due to the non-polynomial completeness (NP-completeness) of the product-mix decision problem, also demonstrated here.

Suggested Citation

  • Linhares, Alexandre, 2009. "Theory of constraints and the combinatorial complexity of the product-mix decision," International Journal of Production Economics, Elsevier, vol. 121(1), pages 121-129, September.
    • Handle: RePEc:eee:proeco:v:121:y:2009:i:1:p:121-129
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00136-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kee, Robert & Schmidt, Charles, 2000. "A comparative analysis of utilizing activity-based costing and the theory of constraints for making product-mix decisions," International Journal of Production Economics, Elsevier, vol. 63(1), pages 1-17, January.
    2. Lea, Bih-Ru & Fredendall, Lawrence D., 2002. "The impact of management accounting, product structure, product mix algorithm, and planning horizon on manufacturing performance," International Journal of Production Economics, Elsevier, vol. 79(3), pages 279-299, October.
    3. Plenert, Gerhard, 1993. "Optimizing theory of constraints when multiple constrained resources exist," European Journal of Operational Research, Elsevier, vol. 70(1), pages 126-133, October.
    4. Wahlers, James L. & Cox, James III, 1994. "Competitive factors and performance measurement: Applying the theory of constraints to meet customer needs," International Journal of Production Economics, Elsevier, vol. 37(2-3), pages 229-240, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Davood Golmohammadi & S. Afshin Mansouri, 2015. "Complexity and workload considerations in product mix decisions under the theory of constraints," Naval Research Logistics (NRL), John Wiley & Sons, vol. 62(5), pages 357-369, August.
    2. Mansouri, S. Afshin & Golmohammadi, Davood & Miller, Jason, 2019. "The moderating role of master production scheduling method on throughput in job shop systems," International Journal of Production Economics, Elsevier, vol. 216(C), pages 67-80.
    3. Golmohammadi, Davood, 2015. "A study of scheduling under the theory of constraints," International Journal of Production Economics, Elsevier, vol. 165(C), pages 38-50.
    4. Pacheco, Diego Augusto de Jesus & Antunes Junior, José Antonio Valle & de Matos, Celso Augusto, 2021. "The constraints of theory: What is the impact of the Theory of Constraints on Operations Strategy?," International Journal of Production Economics, Elsevier, vol. 235(C).
    5. Machado, Mariana Paim & Abreu, Jaqueline Lilge & Morandi, Maria Isabel Motta & Piran, Fabio Sartori & Lacerda, Daniel Pacheco, 2023. "Exploratory decision robustness analysis of the theory of constraints focusing process using system dynamics modeling," International Journal of Production Economics, Elsevier, vol. 260(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zheng-Yun Zhuang & Shu-Chin Chang, 2017. "Deciding product mix based on time-driven activity-based costing by mixed integer programming," Journal of Intelligent Manufacturing, Springer, vol. 28(4), pages 959-974, April.
    2. Wen-Hsien Tsai & Shang-Yu Lai & Chu-Lun Hsieh, 2023. "Exploring the impact of different carbon emission cost models on corporate profitability," Annals of Operations Research, Springer, vol. 322(1), pages 41-74, March.
    3. Lea, Bih-Ru & Fredendall, Lawrence D., 2002. "The impact of management accounting, product structure, product mix algorithm, and planning horizon on manufacturing performance," International Journal of Production Economics, Elsevier, vol. 79(3), pages 279-299, October.
    4. Wen-Hsien Tsai & Shi-Yin Jhong, 2018. "Carbon Emissions Cost Analysis with Activity-Based Costing," Sustainability, MDPI, vol. 10(8), pages 1-26, August.
    5. Pacheco, Diego Augusto de Jesus & Antunes Junior, José Antonio Valle & de Matos, Celso Augusto, 2021. "The constraints of theory: What is the impact of the Theory of Constraints on Operations Strategy?," International Journal of Production Economics, Elsevier, vol. 235(C).
    6. Wen-Hsien Tsai, 2018. "Carbon Taxes and Carbon Right Costs Analysis for the Tire Industry," Energies, MDPI, vol. 11(8), pages 1-22, August.
    7. Wen-Hsien Tsai & Jui-Chu Chang & Chu-Lun Hsieh & Tsen-Shu Tsaur & Chung-Wei Wang, 2016. "Sustainability Concept in Decision-Making: Carbon Tax Consideration for Joint Product Mix Decision," Sustainability, MDPI, vol. 8(12), pages 1-22, November.
    8. Wen-Hsien Tsai & Shang-Yu Lai, 2018. "Green Production Planning and Control Model with ABC under Industry 4.0 for the Paper Industry," Sustainability, MDPI, vol. 10(8), pages 1-29, August.
    9. Wellington, John F. & Guiffrida, Alfred L. & Lewis, Stephen A., 2014. "Interior analysis of the green product mix solution," European Journal of Operational Research, Elsevier, vol. 237(3), pages 966-974.
    10. Myrelid, Andreas & Olhager, Jan, 2019. "Hybrid manufacturing accounting in mixed process environments: A methodology and a case study," International Journal of Production Economics, Elsevier, vol. 210(C), pages 137-144.
    11. Wen-Hsien Tsai & Shuo-Chieh Chang & Yuchun Teng, 2024. "Equilibrium between Environmental and Economic Objectives: An Activity-Based Costing Approach Application for Carbon Emissions Management in the Aluminum Alloy Wheel Industry," Energies, MDPI, vol. 17(6), pages 1-37, March.
    12. Tsai, Wen-Hsien & Lai, Chien-Wen & Tseng, Li-Jung & Chou, Wen-Chin, 2008. "Embedding management discretionary power into an ABC model for a joint products mix decision," International Journal of Production Economics, Elsevier, vol. 115(1), pages 210-220, September.
    13. Bhattacharya, Arijit & Vasant, Pandian, 2007. "Soft-sensing of level of satisfaction in TOC product-mix decision heuristic using robust fuzzy-LP," European Journal of Operational Research, Elsevier, vol. 177(1), pages 55-70, February.
    14. Kee, Robert & Schmidt, Charles, 2000. "A comparative analysis of utilizing activity-based costing and the theory of constraints for making product-mix decisions," International Journal of Production Economics, Elsevier, vol. 63(1), pages 1-17, January.
    15. C. Homburg & Julia Nasev & Philipp Plank, 2018. "The impact of cost allocation errors on price and product-mix decisions," Review of Quantitative Finance and Accounting, Springer, vol. 51(2), pages 497-527, August.
    16. Golmohammadi, Davood, 2015. "A study of scheduling under the theory of constraints," International Journal of Production Economics, Elsevier, vol. 165(C), pages 38-50.
    17. Ribeiro, M.A. & Silveira, J.L. & Qassim, R.Y., 2007. "Joint optimisation of maintenance and buffer size in a manufacturing system," European Journal of Operational Research, Elsevier, vol. 176(1), pages 405-413, January.
    18. Erin C. McKie & Sanjay Laxman Ahire, 2024. "Enhancing the Reach of Socially Missioned Nonprofits: Insights from a TOC-LP Application," Interfaces, INFORMS, vol. 54(2), pages 127-146, March.
    19. Mansouri, S. Afshin & Golmohammadi, Davood & Miller, Jason, 2019. "The moderating role of master production scheduling method on throughput in job shop systems," International Journal of Production Economics, Elsevier, vol. 216(C), pages 67-80.
    20. Maria-Victòria Sánchez-Rebull & Angels Niñerola & Ana-Beatriz Hernández-Lara, 2023. "After 30 Years, What Has Happened to Activity-Based Costing? A Systematic Literature Review," SAGE Open, , vol. 13(2), pages 21582440231, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:121:y:2009:i:1:p:121-129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.