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Eli Webinar 3
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When: 02/05/2011
From 7:00 AM to 8:30 AM PST
Contact: TOC Admin

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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"

Concentrating 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.