Throughput Accounting
Updated 2026-07-31
INTRODUCTION
English translation pending.
CORE DEFINITION
A management accounting approach developed by Eliyahu Goldratt as part of the Theory of Constraints. It reduces performance to three measures: throughput, the rate at which the system generates money through sales; inventory, the money invested in things intended for sale; and operating expense, the money spent turning inventory into throughput. Crucially, throughput counts only what is sold, not what is produced. The method rejects allocating cost across products because allocation points decisions away from the resource that actually limits earnings.
SCAFFOLDING EFFECT
Reduce cognitive load
- Profit compass: Judge an improvement by whether it raises sold output rather than by local efficiency. - Waste check: Treat production that does not sell as inventory cost, not as achievement. - Bottleneck pricing: Value capacity by bottleneck hours consumed rather than by machine utilisation.
Anchor fast decisions
In a constrained system the bottleneck sets total output, so improving anything else adds only inventory and cost. Conventional cost accounting spreads overhead across products, which makes a product look expensive because it consumes machine time rather than because it consumes the scarce resource. Measuring throughput against bottleneck time instead aligns each decision with the one resource that actually limits earnings, so local gains stop masquerading as profit.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
account_treeGenealogyexpand_more
menu_bookReferencesexpand_more
Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Throughput_accountingverified
PRIVATE NOTES · Only visible to you
SAVED Q&A
ENTRY Q&A · Private saving available
Ask with a clear boundary
thinkingmodels answers from published entry context only.
Your question is sent to thinkingmodels. The answer uses public entry context only.
RELATED MODELS