Friday, September 26, 2014

Focus and Leverage Part 377

Yesterday I received an interesting email from one of my blog followers and I want to share my answer with everyone, but please know that I'll get back to my discussion on accounting in my next blog posting.  The follower asked me this question, "In most discussions on the Theory of Constraints, writers use the chain analogy to demonstrate the concept of the system constraint.  Why do you use a piping system to explain the constraint?"  So in today's posting, I want to explain why I switched from the chain analogy to the piping system that I now use.

As the reader stated, most people use the concept of a chain having a weakest length to demonstrate that focusing improvement on any other link of the chain than the weakest one will not guarantee that the chain will be stronger.  The point being that only by strengthening the weakest link will the chain be stronger and therefore be able to handle a heavier load.  I thought about this way back when and realized that in organizations, especially those that manufacture products, what we're really trying to explain is how do we get better flow and therefore, more throughput?  And while the chain concept is an excellent description of why it's important to strengthen the weakest part of the system, the chain is not about flow.  For those of you who may not be familiar with the Theory of Constraints, Dr. Goldratt explained that the process of ongoing improvement (POOGI) revolves around 5 focusing steps which are:
  1. Identify the system constraint (the chain's weakest link)
  2. Decide how to exploit the system constraint (how do we make the weakest link stronger?)
  3. Subordinate everything else to the above decision (don't work on strengthening the other links)
  4. If necessary, elevate the system constraint (sometimes after completing steps 1 and 2 you may have to spend money to strengthen the weakest link)
  5. When the constraint is broken, return to Step 1, but don't let inertia create a new system constraint (once the weakest link has been strengthened, there will be a new weakest link)
So why do I use the piping diagram to demonstrate the concept of the system constraint.  Let's look first at the piping diagram that I use.  In this diagram I have drawn a cross section of a piping system with each pipe having a different diameter.  Notice the two questions I ask next to the diagram.
 


I first lay the foundation for the question of needing more water to flow through the system and tell them that it is their job to increase the flow of water through the system.  I then ask what must be done to increase the throughput of water through this system and why they would do what they recommend.  Herein lies the major reason I use the piping diagram instead of the chain.  I equate the flow of water through the pipes to the flow of products through a process.  In other words, whereas the chain analogy talks about improving the strength of the chain, the piping diagram affords me the opportunity to interject flow, just like what happens in a typical manufacturing facility.  Section E is the system constraint just as the weakest link is in the chain.  Let's continue on with this line of reasoning.
 
 
 
In this slide I point out that Section E is the system constraint and then ask the question about what information they would need to determine the required diameter of Section E to deliver the right amount of water?  The point being that the demand placed on the constraint would determine how large the new diameter would need to be to supply the right amount of water.  The answer to this question is the same no matter whether you're talking about water flow or the amount of product to be produced in a manufacturing process.  In both cases, the determination would be based upon demand.  
 
In the next slide, we have changed the diameter of Section E to a larger diameter, but what I want the "students" to see here is that once the current constraint has been broken, it moves to a new location, meaning that there will always be a constraint within the system.....at least until customer demand has been satisfied.  When this happens, the constraint moves to the market, meaning that they now have more capacity to accept additional orders.
 


 
Before moving on, it's important to mention something.  The subordination step in Goldratt's 5 focusing steps is automatically realized in the piping diagram because of the amount of water passing through the constraint limits the flow through all pipes after the constraint.  I also take the time to explain that if the amount of water flowing into the piping system was increase, then it would back up and overflow.  This, of course, equates to running non-constraints at a faster rate than the constraint.
 
In the last slide, I ask my "students" if increasing the diameter of any or all sections of the piping diagram would result in more throughput of water through this system.  Of course the answer is no, only by changing (increasing) the diameter of the constraint will more water flow.  One of the problems I have with Lean is that many times teams work on non-constraints instead of the constraint and then are surprised when throughput doesn't improve.  As pointed out in this slide, the inevitable conclusion is that the system constraint controls the throughput and focusing improvement efforts anywhere else is usually wasted effort.  Of course, Cost Accounting devotees would disagree with this last statement.
 
 
 




I hope that you see the logic in why I use the piping diagram, rather than the chain analogy to explain the concept of the system constraint and why it's important to focus improvement efforts on the constraint. Please understand that I totally support using the chain analogy, but for my "students" it seems to bring the concept of the system constraint to them much faster. In my next posting I will return to my discussing on accounting methods.
Bob Sproull

Wednesday, September 24, 2014

Blog Posting Index to Part 375


Post #                    Subject Discussed

Each of the following postings can be reached by searching for the number designation below.  For example:  1 is Focus and Leverage or 2 is Focus and Leverage Part 2 and so forth.  The link to the first blog posting is: 


 

1. Introduction to TOC – Lean – Six Sigma

2. Why Improvement Initiatives Fail

3. The Basic Concepts of TOC

4. Throughput Accounting

5. The Process of On-Going Improvement (POOGI)

6. The 3 Cycles of Improvement

7. Combining TOC, Lean and Six Sigma Graphically

8. Step 1a Performance Metrics

9. Planning Steps 1b and 1c Reducing Waste and Variation

10. Developing a Constraint’s Improvement Plan

11. This number was skipped

12. Steps 1b and 1c Reducing Waste and Variation plus an intro to DBR

13. Drum-Buffer-Rope

14. The Final Steps of UIC

15. How do I start the UIC?

16. The 10 Prerequisite Beliefs

17. Comparing Lean, Six Sigma and TOC

18. Types of Constraints

19. The Logical Thinking Processes

20. Undesirable Effects (UDE’s)

21. Categories of Legitimate Reservation

22. Current Reality Trees

23. Constructing Current Reality Trees

24. Conflict Diagrams Basic Principles

25. Constructing Conflict Diagrams

26. Intro to Future Reality Trees

27. Constructing Future Reality Trees

28. Prerequisite Trees

29. Constructing Prerequisite Trees

30. Transition Trees

31. Constructing Transition Trees

32. Book Announcement

33. Project Management Failures

34. Project Management Negative Behaviors

35. Critical Path Management (CPM)

36. Critical Chain Project Management (CCPM)

37. Tracking Projects In CCPM

38. Final Posting on CCPM

39. Intro to the TOC Parts Replenishment Model versus the Min/Max System

40. The TOC Parts Replenishment Model

41. Interview with Joe Dager from Business901

42. Deming, Ohno and Goldratt Commonality

43. Dedication to Dr. Eliyahu Goldratt

44. How processing time, cycle time, throughput and WIP are interrelated

45. Little’s Law

46. Batch and queue production system and the fallacy of a balanced line

47. Why an unbalanced line is better.

48. What prevents me from making more money now and more money in the future?

49. More on the 10 Prerequisite Beliefs

50. Motivating a work force to actively participate in improvement initiatives

51. Re-Introducing the Intermediate Objectives Map

52. Introducing Be Fast or Be Gone: Racing the Clock with CCPM

53. Parkinson’s Law, The Student Syndrome, Cherry Picking and Multi-Tasking

54. Overcoming the four negative behaviors in Project Management

55. Intro to combining the Interference Diagram (ID) and the IO Map

56. The Simplified Strategy

57. The Interference Diagram

58. Interference Diagram for Strategy

59. The ID/IO Simplified Strategy

60. Preface Part 1 for Epiphanized©

61. Preface Part 2 for Epiphanized©

62. CHAPTER 1 Part 1 for Epiphanized©

63. CHAPTER 1 Parts 2 and 3 for Epiphanized©

64. CHAPTER 1 Part 4 for Epiphanized©

65. CHAPTER 1 Part 5 for Epiphanized©

66. Focused Operations Management For Health Service Organizations by Boaz Ronen, Joseph Pliskin and Shimeon Pass

67. Marketplace Constraints

68. A Discussion on Variability

69. More Discussion on Variability

70. Still More Discussion on Variability

71. Paper from the International Journal of Integrated Care

72. Value Stream Mapping

73. Paths of Variation

74. Step 3, Subordination

75. The Key to Profitability: Making Money Versus Saving Money

76. My First Experience With TOC

77. TOC in Non-Manufacturing Environments

78. Deborah Smith’s Excellent Chapter in the TOC Handbook (i.e. Chapter 14)

79. More on Performance Metrics

80. Efficiency, Productivity, and Utilization (EPU) ©

81. Productivity as a Performance Metric

82. Utilization as a Performance Metric

83. What the Dog Saw –Malcolm Gladwell

84. Speaking at the CPI Symposium – Cal State, Northridge

85. NOVACES– A Great Young Company

86. NOVACES’SystemCPI©

87. Problems With My Publisher

88. The Why? – Why? Diagram

89. Experience With the Integrated Methodology

90. A New Piping Diagram

91. The Healthcare Industry

92. More Bad News From the Publisher

93. A Message from the CPI Symposium

94. Multiple Drum-Buffer-Rope

95. Problem Solving Roadmap

96. Problem Prevention Roadmap

97. Improving Profitability

98. More on Throughput Accounting

99. More on Parts Replenishment

100. TLS

101. Engaging the "Money Makers" in Your Company

102. A Conversation on the Theory of Constraints

103. The Key to Successful Consulting Engagements

104. The Three Basic Questions to Answer

105. A Problem With the Airlines

106. A Better Way to Improve Processes and Systems

107. The Problem With Project Management

108. Critical Path Project Management Revisited

109. Critical Chain Project Management Revisited

110. The Fever Chart

111. Comparing CPM and CCPM

112. Performance Improvement for Healthcare – Leading Change with Lean, Six Sigma and Constraints Management

113. More on Performance Improvement for Healthcare

114. Even more on Performance Improvement for Healthcare

115. Still One More on Performance Improvement for Healthcare

116. The Final One on Performance Improvement for Healthcare

117. The Real Final One on Performance Improvement for Healthcare

118. Focused Operation's Management for Health Services Organizations.

119. Focused Management Methodology

120. The Clogged Drain

121. The “Soft” Tools of Improvement

122. More on TOC’s Distribution/Replenishment solution

123. Still More on TOC’s Distribution/Replenishment solution

124. Amir Schragenheim’s Chapter 11 entry in the TOC Handbook

125. Comparison of Lean, Six Sigma and TOC

126. A Simple Lesson on Applying TLS to Your Processes

127. A Historical Index of Blog Postings

128. Mafia Offer Part 1

129. Mafia Offer Part 2

130. Mafia Offer Part 3

131. Airline Problems

132. A YouTube Interview with Bob Sproull and Mike Hannan

133. Active Listening

134. Viable Vision

135. Throughput Accounting

136.  Performance Metrics

137.  On-the-Line Charting

138.  Comment on Epiphanized from a reader in the US Marines

139.  Active Listening

140.  Healthcare Case Study

141.  Change

142.  Getting buy-in for Change

143.  Aviation Maintenance, Repair and Overhaul Client Part 1

144.  Aviation Maintenance, Repair and Overhaul Client Part 2

145.  Continuous Improvement in Healthcare

146.  Using Your Senses in Continuous Improvement

147.  A Video by Phillip Marris on CI

148.  An article about a Construction Company Using the TOC Thinking Processes

149.  Using TOC in Healthcare Part 1

150.  Using TOC in Healthcare Part 2

151.  Using TOC in Healthcare Part 3 Supply Replenishment

152.  Using TOC in Healthcare Part 4 Supply Replenishment (con’t)

153.  Using TOC in Healthcare Part 5 Supply Replenishment (final)

154.  The Sock Maker

155.  The Negative Effects of Using Efficiency

156.  Cost Accounting Part 1

157.  A Political Voting Story

158.  Cost Accounting Part 2

159.  Cost Accounting Part 3

160.  Using TLS for the Affordable Care Act

161.  The System Constraint in Hospitals Part 1

162.  Wait Times in Hospitals

163.  The Oncology Clinic Case Study Part 1

164.  The Oncology Clinic Case Study Part 2

165.  Article: Emergency Department Throughput, Crowding, and Financial Outcomes for Hospitals

166.  Goldratt’s 5 Focusing Steps in Healthcare

167.  My First Experience With TOC Part 1

168.  My First Experience With TOC Part 2

169.  My First Experience With TOC Part 3

170.  My First Experience With TOC Part 4

171.  My First Experience With TOC Part 5

172.  My First Experience With TOC Part 6

173.  Healthcare Case Study Part 1

174.  Healthcare Case Study Part 2

175.  Healthcare Case Study Part 3

176.  TOC in Healthcare

177.  Healthcare Case Study Part 4

178.  My Transition From Aviation Maintenance to Healthcare

179.  Door to Doc Time Case Study Part 1

180.  Door to Doc Time Case Study Part 2

181.  Door to Doc Time Case Study Part 3

182.  Door to Doc Time Case Study Part 4

183.  My White Paper in Quality Forum Part 1

184.  My White Paper in Quality Forum Part 2

185.  My White Paper in Quality Forum Part 3

186.  A Meeting on Epiphanized at the Pittsburgh Airport

187.  Billing for Immunizations Case Study Part 1

188.  Some Thoughts on Performance Improvement Part 1

189.  Some Thoughts on Performance Improvement Part 2

190.  Case Study on Using TOC in Healthcare

191.  IO Map

192.  TOC Thinking Process Tools Part 1

192B.  TOC Thinking Process Tools Part 2

193.  Case Study on How to Use TOC’s Thinking Processes Part 1

194.  Case Study on How to Use TOC’s Thinking Processes Part 2

195.  Case Study on How to Use TOC’s Thinking Processes Part 3

196.  Synchronized and Non-synchronized Production

197.  Competitive Edge Factors

198.  Case Study on How to Use TOC’s Thinking Processes Part 4

199.  Case Study on How to Use TOC’s Thinking Processes Part 5

200.  Case Study on How to Use TOC’s Thinking Processes Part 6

201.  Case Study on How to Use TOC’s Thinking Processes Part 7

202.  Case Study on How to Use TOC’s Thinking Processes Part 8

203.  Case Study on How to Use TOC’s Thinking Processes Part 9

204.  Case Study on How to Use TOC’s Thinking Processes Part 10

205.  Case Study on How to Use TOC’s Thinking Processes Part 11

206.  Case Study on How to Use TOC’s Thinking Processes Part 12

207.  Case Study on How to Use TOC’s Thinking Processes Part 13

208.  Case Study on How to Use TOC’s Thinking Processes Part 14

209.  Case Study on How to Use TOC’s Thinking Processes Part 15

210.  Case Study on How to Use TOC’s Thinking Processes Part 16

211.  The IO Map Revisited Part 1

212.  The IO Map Revisited Part 2

213.  The IO Map Revisited Part 3

214.  The IO Map Revisited Part 4

215.  An Interview About The Ultimate Improvement Cycle by Joe Dager

216.  Healthcare Case Study:  Door to Balloon Time Part 1

217.  More On My First Experience With TOC Part 1

218.  More On My First Experience With TOC Part 2

219.  More On My First Experience With TOC Part 3

220.  More On My First Experience With TOC Part 3

221.  More On My First Experience With TOC Part 4

222.  A Discussion on Constraints Management Part 1

223.  A Discussion on Constraints Management Part 2

224.  A Discussion on Constraints Management Part 3

225.  A Discussion on Constraints Management Part 4

226.  A Discussion on Constraints Management Part 6

227.  How I Present TOC Basics to Students & Teams Part 1 (Most viewed of all posts)

228.  How I Present TOC Basics to Students & Teams Part 2

229.  YouTube Video on Improving Flow Through a Bottleneck

230.  YouTube Video on Throughput Accounting

231.  YouTube Video on What to Change

232.  YouTube Video on What to Change To

233.  YouTube Video on How to Cause the Change to Happen

234.  A Meeting With an Executive of a Larger Corporation

235.  The Missing Link

236.  You Tube Video by Goldratt on Henry Ford and Taichi Ohno

237.  Prevention Versus Detection – The Bug Guy

238.  An Article by Anna Gorman of the LA Times

239.  TOC’s Solution to Supply Chain Problems

240.  The Nun and the Bureaucrat Part 1

241.  The Nun and the Bureaucrat Part 2

242.  The Nun and the Bureaucrat Part 3

243.  The Nun and the Bureaucrat Part 4

244.  The Nun and the Bureaucrat Part 5

245.  The Nun and the Bureaucrat Part 6

246.  A Healthcare Clinic Case Study Part 1

246B.  An Update to Focus and Leverage Part 246

247,  Drum Buffer Rope in Manufacturing

248.  The Sock Maker Revisited Part 1

249.  The Sock Maker Revisited Part 2

250.  Throughput Accounting Part 1

251.  Throughput Accounting Part 2

252.  Throughput Accounting Part 3

253.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 1

254.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 2

255.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 3

256.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 4

257.  How to Use and Integrated TOC, Lean & Six Sigma Methodology Part 5

258.  Critical Path Project Management Versus Critical Chain PM Part 1

259.  Critical Path Project Management Versus Critical Chain PM Part 2

260.  Critical Path Project Management Versus Critical Chain PM Part 3

261.  Critical Path Project Management Versus Critical Chain PM Part 4

262.  Critical Path Project Management Versus Critical Chain PM Part 5

263.  Critical Path Project Management Versus Critical Chain PM Part 6

264.  The Cabinet Maker – A TOC Case Study Part 1

265.  The Cabinet Maker – A TOC Case Study Part 2

266.  The Cabinet Maker – A TOC Case Study Part 3

267.  The Cabinet Maker – A TOC Case Study Part 4

268.  How I Run Improvement Events

269.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 1

270.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 2

271.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 3

272.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 4

273.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 5

274.  Using The Goal Tree vs. the Full Thinking Process Analysis Part 6

275.  An Analysis of Focus and Leverage’s Top Page View Postings

276.  An Index of All Focus and Leverage Blog Posts

277.  Using the Thinking Processes in Healthcare Part 1

278.  Using the Thinking Processes in Healthcare Part 2

279.  Using the Thinking Processes in Healthcare Part 3

280.  The Four Disciplines of Execution Part 1

281.  The Four Disciplines of Execution Part 2

282.  The Four Disciplines of Execution Part 3

283.  The Four Disciplines of Execution Part 4

284.  The Four Disciplines of Execution Part 5

285.  The Goal Tree – A New Way to Make it and Use It Part 1

286.  The Goal Tree – A New Way to Make it and Use It Part 2

287.  The Goal Tree – A New Way to Make it and Use It Part 3

288.  Operation Excellence by Jim Covington

289.  The Saw Mill Assessment

290.  How I present the Theory of Constraints to People Not Familiar With it

291.  David and Goliath – Malcolm Gladwell’s Latest Book

292.  The Basics of TOC

293.  TOC’s Replenishment Model Part 1

294.  TOC’s Replenishment Model Part 2

295.  Blog Posting Index

296.  Overcoming Natural Resistance to Change

297.  Integrating TOC, Lean and Six Sigma Part 1

298.  Appendix 1 from Epiphanized Part 1

299.  The Winter Storm in Atlanta

300.  Appendix 1 from Epiphanized Part 2

301.  Appendix 1 from Epiphanized Part 3

302.  Appendix 1 from Epiphanized Part 4 Final

303.  Bill Dettmer videos on TOC’s Thinking Processes

304.  Queuing Theory Part 1

305.  Queuing Theory Part 2

306.  Delta Airlines Lack of Customer Focus

307.  Bill Dettmer’s Book Strategic Navigation

308.  Excerpts from The Ultimate Improvement Cycle – My second book Part 1

309.  Excerpts from The Ultimate Improvement Cycle – My second book Part 2

310.  Excerpts from The Ultimate Improvement Cycle – My second book Part 3

311.  Excerpts from The Ultimate Improvement Cycle – My second book Part 4

312.  Excerpts from The Ultimate Improvement Cycle – My second book Part 5

313.  The Ultimate Improvement Cycle – Step 1:  Identify - My second book Part 6

314.  The Ultimate Improvement Cycle – Step 2:  Define, Measure and Analyze - My second book Part 7

315.  The Ultimate Improvement Cycle – Step 3:  Improve - My second book Part 8

316.  The Ultimate Improvement Cycle – Step 3:  Control - My second book Part 9

317.  Throughput Accounting Part 1

318.  Throughput Accounting Part 2

319.  Throughput Accounting Part 3

320.  Throughput Accounting Part 4

321.  Throughput Accounting Part 5

322.  Throughput Accounting Part 6

323.  Throughput Accounting Part 7 Final

324.  Optimium Health’s Amazing New Software for Healthcare

325.  Personal experiences using Throughput Accounting

326.  MRO Project Management Case Study Part 1

327.  MRO Project Management Case Study Part 2

328.  MRO Project Management Case Study Part 3

329.  MRO Project Management Case Study Part 4

330.  MRO Project Management Case Study Part 5

331.  MRO Project Management Case Study Part 6

332.  MRO Project Management Case Study Part 7 (Finale)

333.  Part’s Replenishment Systems Part 1

334.  Part’s Replenishment Systems Part 2

335.  Part’s Replenishment Systems Part 3

336.  Part’s Replenishment Systems Part 4

337.  Part’s Replenishment Systems Part 5

338.  Part’s Replenishment Systems Part 6 (Finale)

339.  My Most Rewarding Experience

340.  Operation Excellence by Jim Covington

341.  Epiphanized sequel update

342.  The intent of Focus and Leverage Part 1

343.  The intent of Focus and Leverage Part 2

344.  The intent of Focus and Leverage Part 3

345.  The intent of Focus and Leverage Part 4

346.  The intent of Focus and Leverage Part 5

347.  My Most Profound Learning

348.  An update to our sequel to Epiphanized

349.  TOC and the VA Problem

350.  Reasons for Failing Improvement Initiatives

351.  Appendix 1 from Epiphanized Part 1

352.  Appendix 1 from Epiphanized Part 2

353.  Appendix 1 from Epiphanized Part 3

354.  Link to a presentation on TLS

355.  Article on 91 Hospitals laying-off Employees

356.  How Cost Accounting is Hurting Hospitals

357.  Improvement Approach for Healthcare

358.  Being a Satisficer Versus an Optimizer

359.  Healthcare Case Study – Door to Doc Time

360.  Presentation by Henry Camp

361.  Healthcare Case Study – Waiting Time to be Admitted

362.  Using the True Subject Matter Experts for Improvement

363.  Problems at WaterSaver

364.  Systems Thinking Part 1

365.  Systems Thinking Part 2

366.  Systems Thinking Part 3

367.  Systems Thinking Part 4

368.  A Great Quote

369.  A New Book on Project Management

370.  Inside the New Book on Project Management

371.  My Version of TLS

372.  TLS Part 2

373.  TLS Part 3

374.  Cost Accounting Versus Throughput Accounting Part 1

375.  Cost Accounting Versus Throughput Accounting Part 2

Tuesday, September 23, 2014

Focus and Leverage Part 376

In my last posting I demonstrated by way of an example from Thomas Corbett's wonderful book, Throughput Accounting, how by using traditional Cost Accounting (CA) to make a decision about product mix, might cause us to make an incorrect decision.  You will recall that by using CA decision criteria relative to which product mix, this fictitious company should produce(i.e. how many women's shirts and how many men's shirts) per week. Based upon these results, the most obvious decision would be to close the company.  In this posting I want to demonstrate one of the flaws of CA when it comes to the correct product mix in this company.  Again, we are using Thomas Corbett's example from his book, Throughput Accounting published by North River Press in 1998.

You will recall from my last post,the product mix that resulted in a loss of $300 was 120 women's shirts and 60 men's shirts.  Corbett demonstrates to us what would happen if we reverse the mix and produce 120 men's shirts and, based upon the sewing time for women's shirts, we will produce 80 of these.  Remember, according to CA rules of engagement the women's shirts were thought to be the most profitable.  As Corbett points out, this is what happens if we sold all of the men's shirts (i.e. the least profitable according to CA) and then filled the remaining time with women's shirts (i.e. the most profitable according to CA).

Item
$’s
Revenue
$20,400
Raw Material Cost
$9,600
 
 
Gross Margin
$10,800
Operating Expense
$10,500
 
 
Net Profit
+$ 300

 
Since after producing 120 men's shirts on the sewing machine we still have 1,200 minutes left over, we can produce 80 women's shirts (i.e. 1,200 minutes/15 minutes/women's shirt = 80 women's shirts).  As a result of this mix, look what's happened to the profit margin!  As Corbett reminds us, we did not change anything in the company's conditions, yet we went from a loss of $300 to a profit of $300 a week!  The bottom line conclusion here is that Cost Accounting did not supply the correct information about which product most contributes to the company's profit!  Corbett continues, we increased the production of the least profitable product (i.e. according to CA guidelines) while decreasing the production of the most profitable product and our profits increased!  Corbett finishes this section with the following statement that I absolutely agree with, "If there is an error in this methodology, other information can be wrong as well."

In my next posting we'll look more into other problems related to Cost Accounting and then begin looking at what I believe is the best accounting methodology in the world today....Throughput Accounting.  I want to thank Thomas Corbett for writing such a wonderful and informative book, Throughput Accounting.  I absolutely encourage everyone who wants to learn more about this method to buy Thomas Corbett's book....you won't regret it!

Bob Sproull