salaries, utilities, supplies, taxes etc • The aim of an enterprise, under TOC is to increase throughput (sales – direct material cost), whilst reducing inventory and operating expense o However it is always possible to reduce operating expense by increasing inventory and vice versa o The trick is to minimise (effectively manage) both Traditional cost world orientations vs. the global goal (TOC) • In the cost world, the assumption is that by controlling department costs, management can maximise the…
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