An Introduction to Theory of Constraints Essay Example | Topics and Well Written Essays - 3750 words

An Introduction to Theory of Constraints - Essay Example TOC is very significance in the fields of management and engineering when it comes to finding solutions to problems in the most accurate, simple and consistent. It helps in reduction of inventory levels, lead and cycle times while improving revenue and reducing time. Significant researches have been done in the field of TOC. Elyahu Goldraft and Jeff Cox in their book â€Å"The Goal: Process of ongoing improvement† highlighted various TOC processes like identification and exploitation of system constraints and goals. They also came up with the classification of constraints as market, policy and physical. These constraints were further subdivided into sub constraints and theories of constraints discussed. Mindset constraint is based on culture and frame of mind, measures is based on the relationship between constraints and achievement of organizational goals and method constraint based on relationship between procedures and technique to achieving actions incompatible with the or ganizational goals. Application of TOC in the Manufacturing example indicates understanding of redefinition of systems goal, thru put, inventory and operating expenses. TOC also helps in calculation of profits and making production decision. Financial Management, Cash Flow and Accounting Principles The objective of this topic would be to comprehend the creation and usage of the accounting information, understanding of accounting language and application of financial accounting in an organization. This would be summarized in the following paragraphs. Finance and accounting have varied roles within an organization. Some of these roles are applied internally within an organization while others are used externally outside an organization. Finance and accounting helps in provision of financial position of an organization, taxation of an organization by the state, federal and the local government. ES-4910 Survey of Engineering Management presents (1) Organizational financial report is als o used by external organs in investment regulation and valuation. Organizational management uses finance and accounting in budgeting, setting product prices, checking of organization performance as well as in general operation of an organization. Understanding of accounting information is very vital to the organizational management. Recording of cash versus accruals forms basics of financial entries. Cash is always entered when there is transfer of cash whereas accruals are entered there is revenue earned or expenditure is incurred. Accrual is a record of transactions over the same period whereas cash records are not time dependent. Other accounting basics include the understanding of business assets, liabilities equity ledger, revenue, expenditure and profit. Accounting entries like the principle of double entry in an accounting is very important in making account receivables and expenditure occurring at the same time. Rules of making entries in journal and using it in calculation of profit and loss are very important. Financial statements help in understanding of different activities in a business. They include cash flows, owner’s equity, business financial position and operational statements. Financial analysis involves comparison of financial information based on period, company changes whereas ratio analysis involves comparison of assets and liabilities. There are current ratio and quick ratio. In the analysis of profits the following are considered; asset return, equity return, gross margin, earning per share. Analysis of ratios involves calculation of; turnover ratio on assets, average turnover ratio and turnover ratio of inventory. In the analysis