Improved TOC for outsourcing decision

Abstract

The aim of this paper is to develop and demonstrate a theory of constraints (TOC) model that utilizes TOPSIS method in estimating the priority of each product in a multiproduct constraint resource environment. The decision model compares four alternatives: Standard cost accounting, Standard Theory-Of-Constraints (TOC), LP analysis and our own solution. The numerical results show that the proposed approach is superior to standard cost accounting and theory of constraints and presents a more realistic state of optimum allocation of resources and measures the performance of the model. This research is limited to the production process where there is no multiple constraints.