The Product Mix Decision Based On TOC And It's Application

The product mix decision(PMD),solved by TOC technique, is defined how to deal with the product mix(PM) of the enterprise to achieve maximize profit with some resources constrains in a certain period,while on the side of the enterprise system,on the kernel principle of the system's resources holistic optimization,and by virtue of Critical Constraint Resource(CCR).In this article, the theory of constraints (TOC) was introduced in brief firstly, and then three important concepts were recommended. They were"throughput","inventory"and"operating expense". Secondly, based on defining"constraint","critical constraint resource","Non-critical constraint resource", the author analyzed and expatiated the five steps technique of TOC to resolve the enterprise management problem, accounted for the nine principles briefly which should be followed by the five steps technique.Based on the above-mentioned matter, the application of TOC to the product mix problem was studied home in this article. The product mix decision problem was divided into simplex resource constrains and manifold resources constrains by enterprise'constrain resources, and their solution steps according to TOC's five key steps ameliorated were presented. Some material examples were solved by TOC's five steps technique, linear programming's simplex method and familiar accounting technique (variational cost technique and full cost technique). The author also contrasted TOC's five key steps with other two techniques. All of these endeavor's purpose is to give proof of the TOC's validity and advantage in PMD.In the end, a positive study of the organization, Danyang eastsea communication equipment mill, was put up to explain TOC's five key steps how to applied to the product mix decision problem and have an optimized solution of the actual question.