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Eli Schragenheim presents
"The Flaws of Both Cost-Per-Unit and T/CU as Critical Information for a Variety of Decisions"
on the specific area of decisions where management accounting has a
devastating impact. The webinar would first inquire the
real faulty assumption behind the concept of
"cost-per-unit”. Understanding the flaws of the concept
is a key to understand the current reluctance of replacing
cost-per-unit with something else. But, does the current
BOK of TOC offer a full support to the decisions currently
supported by the "cost-per-unit”? The webinar would
discuss some common misunderstanding of the TOC concepts, notably
how the T/CU might lead to wrong decisions. Thus the boundaries
of the current knowledge of TOC regarding throughput accounting
would be properly understood, and the difficulty in providing a
wider support to these decisions will be discussed in order to pave
the way for a direction of solution. The role of
uncertainty in such decisions would be brought up. The
impact of the current lack of tools to support those decisions
would be demonstrated by a leading example.
About this series:
Being able to make good decisions is a requirement of any manager
and leader. In this series Eli Schragenheim (the other
Eli) wishes to think aloud on how TOC guides us to be better
decision makers. The most interesting question to be
dealt in the series is what "hard decisions” are and how to make
them "not-too-hard decisions”? There are two different
categories of causes for the difficulty to arrive to a clear
decision: complexity and uncertainty. Complexity is
nicely handled by TOC through focusing and outlining the cause and
effect relationships of the most critical elements. In
itself this is already a valuable addition to the work of Herbert
Simon, another influential figure on management.
Uncertainty is another element where TOC has provided certain
solutions for some specific cases, but, yet, does not provide a
generic way to systematically deal with uncertainty.