2 ms·
You choose the option that gives you the biggest return on invest per time of the constraint. In this case your development time probably is the constraint. ie
by elviejo 17y ago
You choose the option that gives you the biggest return on invest per time of the constraint. In this case your development time probably is the constraint.
ie.
Sales price Raw Materials Margin
Product A 1000 us 200 usd 800
Product B 2000 us 200 usd 1800
so seems like product B is a no brainer right?
But if we consider the time it takes to implement:
Margin Time to Develop Margin / hrs
Product A 800 100 hrs 8 usd / hr
Product B 1800 300 hrs 6 usd / hr
So product A is in fact a better use of your time.
This analysis method is called Throughput Accounting.
From a management philosophy called: Theory of Constraints
- elviejo 17y agoThe one that gives you the biggest return on invest per time of the constraint. ie. Sales price Raw Materials Margin Product A 1000 us 200 usd 800 Product B 2000 us 200 usd 1800 so seems like product B is a no brainer right? But if we consider the time it takes to implement: Margin Time to Develop Margin / hrs Product A 800 100 hrs 8 usd / hr Product B 1800 300 hrs 6 usd / hr So product A is in fact a better use of your time. This analysis method is called Throughput Accounting. From a management philosophy called: Theory of Constraints Note: This is the same as the my previous comment just used the correct spaces.