Page 48 - PM Integrated Workbook 2018-19

Chapter 2

6.4 The Throughput Accounting ratio

Throughput per unit
Throughput (return) per factory hour =
'
Product s time on the bottleneck resource

Total factory cost
Cost per factory hour =
Total bottleneck resource time available

Return per factory hour
Throughput Accounting ratio (TPAR) =
Cost per factory hour

 TPAR>1 would suggest that throughput exceeds operating costs so the product
should make a profit. Priority should be given to the products generating the
best ratios.

 TPAR<1 would suggest that throughput is insufficient to cover operating costs,
resulting in a loss.

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