Explore BrainMass
Share

Explore BrainMass

    Theory of Constraints

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See attached file for actual problem.

    Need help understanding how to apply the theory of constraints to a merchandising organization.

    ---
    University Bookstore is a nonprofit retail outlet for textbooks, computers, and general merchandise (including trade books, supplies, and university-licensed apparel and gifts). It is located near the main campus of State University and controls the majority of the local market share for new and used textbooks. Other retail outlets, such as Barnes & Noble, University Drugstore (a private company), and Comp USA, have larger shares of the local market for other items. Tammy Waialua is a full-time accounting student and part-time employee of University Bookstore who recently studied the current chapter on managing constrained resources. She observed that the bookstore's primary constraints are floor and shelf space for fast selling items such as textbooks and market share for slow-selling items such as general merchandise..

    Average inventory levels and the most recent year's cost of goods sold in the three departments follow.

    Department Average Inventory Cost of Goods Sold
    New and used textbooks $1,000,000 $4,000,000
    Computers 400,000 1,500,000
    General Merchandise 1,200,000 1,400,000

    Tammy approached her boss, the bookstore's general manager, and suggested that they try to improve its efficiency by managing constraints more effectively. The general manager thanked Tammy for her concern but assured her that this manufacturing technique was neither needed by nor applicable to the nonprofit bookstore.

    Required:

    a) Explain how University Bookstore's constraints can be both floor space (internal) and market share (external)
    b) Is Tammy or her boss correct about the relevance of the Theory of Constraints to the bookstore's operations? Explain
    c) Prepare a short report with recommendations for managing the bookstore more efficiently.
    ---

    © BrainMass Inc. brainmass.com October 9, 2019, 5:45 pm ad1c9bdddf
    https://brainmass.com/business/accounting/theory-of-constraints-66776

    Attachments

    Solution Preview

    I enjoyed this question because I was once an accounting student who worked in the University Union bookstore...How funny.

    a. Explain how University Bookstore's constraints can be both floor space (internal) and market share (external).
    b. Is Tammy or her boss correct about the relevance of the Theory of Constraints to the bookstore's operations? Explain.
    c. Prepare a short report with recommendations for managing the bookstore more efficiently.

    A) The constraints can be internal if floor space is limited it is mostly likely a crowded ...

    Solution Summary

    Explain how University Bookstore's constraints can be both floor space (internal) and market share (external).

    $2.19