The Theory of Constraints (TOC) has shed new light on how to manage operations for optimal performance. One way it has done so is by redefining what optimal performance is and how we measure it. Whenever we measure things in business, we often need to bring accountants into the mix, and TOC is no different.

If you go to the website of The CPA Journal you'll find a number of articles concerning measuring operations. The one in which we are interested, however, pertains directly to Theory of Constraints, as you'll find in the article entitled "Managing Constraints."

Read through the article. You'll find TOC laid out in an easy to understand format along with a simple, extended example of all the key concepts. Once you are through with the article, answer the following questions.

1. According to this piece, how are throughput, inventory, and operating expense defined under TOC?
   
   
2. In the Constrained Company example, where is the bottleneck? How is it identified?
   
   
3. According to TOC (and the article), how should the bottleneck be handled?
   
   
4. The technique of linear programming (LP) is also based on constraints. Explain how you could adapt the Constrained Company example to a linear programming format. Be sure to keep in mind the key points of TOC in your answer.

- Scott Erickson