CHAPTER 19
QUALITY, TIME, AND THE THEORY OF CONSTRAINTS
LEARNING OBJECTIVES
1. Explain the four cost categories in a cost-of-quality program
2. Use three methods to identify quality problems
3. Identify the relevant costs and benefits of quality improvements
4. Provide examples of nonfinancial quality measures of customer satisfaction and internal performance
5. Describe the benefits of financial and nonfinancial measures of quality
6. Describe customer-response time and explain why delays happen and their costs
7. Apply the three measures in the theory of constraints
8. Manage bottlenecks
CHAPTER OVERVIEW
Chapter 19 provides a broad view of the factors of quality and time in the manufacture of a product or
performance of a service. The role of the management accountant is emphasized. Management
accountants assist managers in taking initiatives in the areas of quality and time by maintaining and
presenting financial and nonfinancial measures of customer satisfaction and internal performance. They
help companies improve quality by computing the costs of quality, assisting in developing cost-effective
solutions to quality problems, and providing feedback about quality improvement.
Quality is studied through examining the costs of quality (COQ), the methods for identifying quality
problems, and using both financial and nonfinancial measures of quality. The costs of quality are
categorized as to prevention, appraisal, internal failure, and external failure. Chapter 18 presented basic
costs in the internal failure category—spoilage, rework, and scrap—of manufacturing the product.
Time is studied through calculation of average waiting time and the components of customer-response
time. Explanation is provided as to the reasons for delays and the costs associated with them.
The theory of constraints (TOC) is also presented as an approach when dealing with multiple parts and
multiple processes that are interdependent in the manufacture of a product. The terminology and basic
methods are presented for this short-run approach to improving the performance of the production system
as a whole. Management accountants also assist managers in making decisions when faced with multiple
constraints such as those described in this section of the chapter.
CHAPTER OUTLINE
I.
Quality as a competitive weapon
A. Focus on quality: reduces costs and increases customer satisfaction
1. International quality standards developed—ISO 9000
2. Creates expertise about products and processes
3. Benefits in preserving revenues, not necessarily generating higher revenues
4. Environmentally responsible
B. Two basic aspects of quality
1. Quality of design: how closely the characteristics of a product or service meet the needs and
wants of customers
2. Conformance quality
a. Definition: refers to the performance of a product or service relative to its design and
product specifications
b. Diagram in texts illustrates interaction of two basic qualities and customer satisfaction
C. Issues in managing conformance quality
1. Costs of quality (COQ)
Learning Objective 1:
Explain the four cost categories in a cost-of-quality program
a. Four categories [Exhibit 19-1]
i.
Prevention costs—costs incurred to preclude the production of products that do not
conform to specifications
ii. Appraisal costs—costs incurred to detect which of the individual units of products
do not conform to specifications
iii. Internal failure costs—costs incurred by a nonconforming product before it is
shipped to customers
iv. External failure costs—costs incurred by a nonconforming product detected after it
is shipped to customers
b. Seven-step activity-based costing approach to determine costs of quality
i.
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Step 1: Identify the chosen product
ii. Step 2: Identify the product’s direct costs of quality
iii. Step 3: Select the cost-allocation bases to use for allocating indirect costs of quality
to the product [Exhibit 19-2]
iv. Step 4: Identify the indirect costs of quality associated with each cost-allocation base
v. Step 5: Compute the rate per unit of each cost-allocation base used to allocate
indirect costs of quality to the product
vi. Step 6: Compute the indirect costs of quality allocated to the product
vii. Step 7: Compute the total costs of quality by adding all direct and indirect costs of
quality assigned to the product
c. Opportunity costs excluded in cost of quality reports
i.
Forgone contribution margin and income from lost sales
ii. Lost production
iii. Lower prices as a result of poor quality
2. Techniques used to analyze quality problems
Do multiple choice 1.
Assign Exercise 19-16 and Problem 19-37.
Learning Objective 2:
Use three methods to identify quality problems
a. Control charts [Exhibit 19-3]
i.
Statistical quality control (SQC) or statistical process control (SPC): formal means
of distinguishing between random and nonrandom variation in an operating process
ii. Control chart: graph of a series of successive observations of a particular step,
procedure, or operation taken at regular intervals of time
iii. Observations outside control limits are ordinarily regarded as nonrandom and worth
investigating
b. Pareto diagrams [Exhibit 19-4]
i.
Observations outside control limits serve as inputs to Pareto diagrams
ii. Pareto diagram: chart that indicates how frequently each type of defect occurs,
ordered from the most frequent to the least frequent
c. Cause-and-effect diagrams [Exhibit 19-5]
i.
Definition: identifies potential causes of failures or defects
Quality, Time, and the Theory of Constraints
255
ii. Major categories of potential causes of failure identified with each cause noted with
arrow within category: general appearance of bone structure of a fish
iii. Analysis of quality problems facilitated by automated equipment and computers that
maintain records of number and types of defects and operating conditions that existed
at time defects occurred
Do multiple choice 2.
Assign Problems 19-29 and 19-36.
Learning Objective 3:
Identify the relevant costs and benefits of quality improvements
3. Relevant costs and benefits of quality improvement [Exhibit 19-6]
a. Relevant costs: incremental costs to implement quality program
b. Relevant benefits: cost savings and estimated increase in contribution margin from higher
sales due to quality improvements
c. Relevant cost and relevant revenue analysis ignores allocated amounts [Chapter 11]
d. Key question: How will total costs and total revenues change under each solution?
e. Look for opportunities to generate higher total revenues from quality improvements
f.
Trends compared over time in cost of quality (COQ) reports
Do multiple choice 3.
Assign problems 19-27 and 19-28.
D. Costs of design quality
1. Designing products that satisfy customer needs
2. Significant component of these costs is opportunity cost of sales lost from not producing a
product that customers want
3. Many of these costs are very difficult to measure objectively (Most companies do not
measure financial costs of design quality but rely on nonfinancial measures.)
E. Nonfinancial measures of quality and customer satisfaction [Concepts in Action]
1. Nonfinancial measures of customer satisfaction
Learning Objective 4:
Provide examples of nonfinancial quality measures of customer satisfaction and internal performance
a. Examples of routine nonfinancial measures of quality of design and external failure
i.
256 Chapter 19
Market research information on customer preferences and customer satisfaction with
specific product features
ii. Number of defective units shipped to customers as a percentage of total units shipped
iii. Number of customer complaints
iv. Percentage of products that fail soon or often
v. Delivery delays
vi. On-time delivery rate
b. Surveys used to measure customer satisfaction: customer experiences and preferences
about products and glimpses of features customers would like in future products
2. Nonfinancial measures of internal performance
a. Examples of nonfinancial measures of prevention, appraisal, and internal failure
i.
Number of defects for each product line
ii. Process yield (ratio of good output to total output)
iii. Employee turnover (ratio of the number of employees who leave the company to the
average total number of employees)
iv. Employee empowerment (ratio of the number of processes in which employees have
right to make decisions without consulting supervisors to the total number of
processes)
v. Employee satisfaction (ratio of employees indicating high satisfaction ratings to the
total number of employees surveyed)
Do multiple choice 4.
Assign Exercise 19-17.
b. Examine trends over time
c. Role of management accountant: review nonfinancial measures for accuracy and
consistency
F. Evaluating quality performance
Learning Objective 5:
Describe the benefits of financial and nonfinancial measures of quality
1. Advantages of costs of quality (COQ) measures
a. Consistent with attention-directing role of management accounting, COQ focuses
managers’ attention on cost of poor quality
b. Financial COQ measures assist in problem solving by comparing costs and benefits of
different quality-improvement programs and setting priorities for cost reduction
Quality, Time, and the Theory of Constraints
257
c. Financial COQ measures provide a single, summary measure of quality performance for
evaluating trade-offs among prevention costs, appraisal costs, internal failure costs, and
external failure costs
2. Advantages of nonfinancial measures of quality
a. Nonfinancial measures of quality are often easy to quantify and easy to understand
b. Nonfinancial measures direct attention to physical processes and hence focus attention on
the precise problem areas that need improvement
c. Nonfinancial measures provide immediate short-run feedback on whether quality
improvement efforts have succeeded
d. Nonfinancial measures are useful indicators of future long-run performance
Do multiple choice 5 and 6.
Assign Exercises 19-18 and 19-20.
II. Time as a driver of strategy
A. Need to measure time in order to manage it properly
Learning Objective 6:
Describe customer-response time and explain why delays happen and their costs
B. Use of operational measures of time
1. Customer-response time: duration between time a customer places an order for a product or
a service to time the product or service is delivered to the customer
a. Components of customer-response time [Exhibit 19-7]
i.
Receipt time: how long it takes to specify exact requirements in the customer’s order
for manufacturing
ii. Manufacturing lead (or manufacturing cycle) time: duration between time an
order is ready to start on the production line to when it becomes a finished good (sum
of waiting time and manufacturing time of an order)
iii. Delivery time: how long it takes to deliver a completed order to the customer
b. Some companies use manufacturing lead time as base for allocating indirect
manufacturing costs to products to motivate managers to reduce time taken to
manufacture products
Do multiple choice 7 and 8.
Assign Exercises 19-19, 21, 22, and 23 and Problems 19-31 and 32.
2. On-time performance: refers to situations in which the product or service is actually
delivered by the time it is scheduled to be delivered
a. Important element of customer satisfaction
258 Chapter 19
b. Trade-off between customer-response time and on-time performance
C. Time drivers and costs of time
1. Time driver: any factor in which change in the factor causes a change in the speed of an
activity
a. Two important drivers of time or reasons for delay [Concepts in Action]
i.
Uncertainty about when customers will order products or services (more random the
placement of orders, the more likely queues will form and delays will occur)
ii. Bottlenecks due to limited capacity (bottleneck: an operation at which the work to be
performed approaches or exceeds the available capacity)
b. Calculation of average waiting time: average amount of time that an order will wait in
line before set up and processed (for single-product case under certain assumptions about
pattern of customer order and how processed) [See text for formula]
i.
Numerator: Manufacturing time per order is a squared term which means the larger
(or longer in time) it is, the greater the chance that the machine will be in use when
an order arrives, and the longer the delay
ii. Denominator: Measures unused capacity or cushion that means the smaller the
unused capacity, the greater the chance that the machine is processing an earlier order
and the greater the delays
iii. Formula in text is for average waiting time
iv. Average manufacturing lead time = average waiting time + manufacturing time
v. Formula can be extended for another product using the same production process—
results in longer average waiting time
2. Relevant revenues and relevant costs of time or cost of delays [Exhibit 19-8]
a. Cost of delays
i.
Lower revenues (Customers may be willing to pay higher price for faster delivery.)
ii. Increased inventory carrying costs

Opportunity costs of investment tied up in inventory

Relevant costs, such as costs of storage, spoilage, deterioration, and materials
handling
b. Some unused capacity is desirable when demand is high: reduces manufacturing lead
time and delays
i.
Becoming more efficient will increase capacity
Quality, Time, and the Theory of Constraints
259
ii. Investing in new equipment will increase capacity
iii. Scheduling carefully will increase capacity
c. Nonfinancial measure can be used to monitor performance on delays
III. Theory of constraints and throughput contribution analysis
A. Products made from multiple parts and processed on many machines causes dependencies among
operations
B. Methods to maximize operating income when faced with some bottleneck and nonbottleneck
operations: theory of constraints (TOC)
Learning Objective 7:
Apply the three measures in the theory of constraints
C. Measurements used in the theory of constraints
1. Throughput contribution: revenues minus direct material cost of goods sold
2. Investments: sum of material costs in direct materials inventory, work-in-process inventory,
and finished goods inventory; R&D cost; and costs of equipment and buildings
3. Operating costs: all costs of operations (other than direct materials costs) incurred to earn
throughput contribution (includes salaries and wages, rent, utilities, and depreciation)
Do multiple choice 9.
D. Objective of TOC: increase throughput contribution while decreasing investments and operating
costs
1. Uses short-run horizon
2. Assumes operating costs to be fixed
E. Management of bottlenecks
Learning Objective 8:
Manage bottlenecks
1. Step 1: Recognize that the bottleneck operation determines throughput contribution of the
system as a whole
2. Step 2: Search and find the bottleneck operation by identifying operations with large
quantities of inventory waiting to be worked on
3. Step 3: Keep the bottleneck operation busy and subordinate all nonbottleneck operations to
the bottleneck operation. That is, the needs of the bottleneck operation determine the
production schedule of nonbottleneck operations
260 Chapter 19
a. To maximize operating income, maximize contribution margin of the constrained or
bottleneck resource [See Chapter 11]
b. To keep bottleneck operation busy, maintain small buffer inventory of jobs waiting for it
c. To produce output at pace of bottleneck; producing more creates excess inventory
4. Step 4: Take actions to increase bottleneck efficiency and capacity—the objective is to
increase throughput minus the incremental costs of taking such action
a. Eliminate idle time (time when the machine is neither being set up to process products
nor actually processing products) at the bottleneck operation
b. Process only those parts or products that increase throughput contribution, not parts or
products that remain in finished goods or spare parts inventories
c. Shift products that do not have to be made on the bottleneck machine to nonbottleneck
machines or to outside facilities
d. Reduce setup time and processing time at bottleneck operation
e. Improve the quality of parts or products manufactured at the bottleneck operation
i.
Cost of poor quality is the cost of materials wasted plus the opportunity cost of lost
throughput contribution
ii. Inspection should be before processing parts at the bottleneck operation
iii. Quality-improvement programs should place special emphasis on minimizing defects
at bottleneck machines
F. Time frame consideration
1. TOC regards operating costs as difficult to change in short run so does not identify individual
activities and drivers of costs
2. ABC (activity-based costing) has a longer-run perspective focused on improving processes by
eliminating nonvalue-added activities and reducing costs of performing value-added activities
so more useful for long-run cost control and profit planning, and capacity management
3. Short-run focus of TOC emphasis on maximizing throughput contribution by managing
bottlenecks complements the long-run strategic cost management focus of ABC
Do multiple choice 10.
Assign Exercises 19-24, 19-25, 19-26, and Problems 19-34 and 19-35.
CHAPTER QUIZ SOLUTIONS: 1.b
2.a 3.c 4.d 5.c 6.d 7.a 8.a 9.c 10.b
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261
CHAPTER QUIZ
1. The four cost categories in a cost of quality program are
a.
b.
c.
d.
2.
product design, process design, internal success, and external success.
prevention, appraisal, internal failure, and external failure.
design, conformance, control, and process.
design, process specification, on-time delivery, and customer satisfaction.
is a formal means of distinguishing between random and
nonrandom variation in an operating process.
a.
b.
c.
d.
Statistical process control (SPC)
A Pareto diagram
A cause-and-effect diagram
A fishbone diagram
3. A key question in relevant cost and relevant revenue analysis is
a.
b.
c.
d.
“By how much can sales be increased and costs reduced?”
“What purpose is best served for cost allocation and which criterion is most appropriate?”
“How will total costs and total revenues change under each solution?”
“What are the amounts of incremental costs and incremental revenues under each alternative?”
4. Which of the following is not a nonfinancial performance measure for customer satisfaction?
a. Number of defective units shipped to customers as a percentage of the total units of product
shipped
b. Number of customer complaints
c. On-time delivery
d. Number of defects for each product line
5. Nonfinancial measures for internal quality performance include all but which of the following?
a.
b.
c.
d.
employee empowerment
process yields
feedback
product defect levels
6. An advantage of financial cost of quality measures is that they
a. are often easy to quantify and understand.
b. provide immediate short-run feedback on whether quality improvement efforts have, in fact,
succeeded in improving quality.
c. direct attention to physical processes and therefore focus attentions on the precise problem areas
needing improvement.
d. provide a single, summary measure of quality performance.
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7. The amount of time between when a customer places an order for a product or requests a service to
when the product or service is delivered to that customer is called
a.
b.
c.
d.
customer-response time.
order receipt time.
order delivery time.
manufacturing lead time.
8. Delays in customer-response time occur because of the
a.
b.
c.
d.
uncertainty about when customers will order products.
unused capacity which impedes average manufacturing time.
customers’ response in paying invoices on time.
overemphasis on measuring time drivers.
9. Which of the following is not one of the three main measurements in the theory of constraints?
a.
b.
c.
d.
investments or inventory
other operating costs
manufacturing lead time
throughput contribution
10. Which of the following is not one of the steps in managing bottlenecks under the theory of
constraints?
a. Identify the bottleneck resource by searching for resources with large quantities of inventory
waiting to be worked on.
b. Increase the efficiency and capacity of the nonbottleneck resources.
c. Subordinate all nonbottleneck operations to the bottleneck operation.
d. Increase the efficiency and capacity of the bottleneck operation.
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WRITING/DISCUSSION EXERCISES
1. Explain the four costs categories in a cost-of-quality program
How could the use of standard costing affect the costs of quality categorized as
prevention, appraisal, internal failure, and external failure? One way in which standard
costing would be of value in analyzing costs of quality is through variance analysis highlighting internal
failure costs. Spoilage, rework, and scrap would be the cause of unfavorable variances that could be
investigated leading to improvements and corrections. Standards are typically set to reflect efficient and
effective work processes. The study necessary to establish standards would also be helpful in
understanding the processing system, allowing for some situations to be corrected or improved earlier.
Standards require planning and thinking ahead, important aspects in the evolution of a management
control system.
2. Use three methods to identify quality problems
Who was W. Edwards Deming and why is his name associated with the subject of
quality? Dr. William Edwards Deming (1900–1993) was an American statistician. His work in Japan
created a revolution in quality in manufacturing as well as in methods of plant management. Though he
began his work in the United States, it was not well received. He then went to Japan where his theories
were fully embraced beginning in 1950. The annual Deming Prize for quality was created in his honor in
Japan. After Japan took the lead in quality of products, Deming’s work was adopted in the United States.
One of his foremost points was that “quality equals success equals profit.” [An interesting article written
by Deming, “On Some Statistical Aids Toward Economic Production,” was published in INTERFACES
(Vol. 5, No. 4) August 1975, a publication of The Institute of Management Science. Control charts are
explained. He also points out that problems of quality are more the cause of the system in use than the
performance of the workers.]
3. Identify the relevant costs and benefits of quality improvements
Discuss relevant costs and benefits of quality improvements in response to the following
quote by Peter Drucker (Wall Street Journal 10/21/93): “Customers do not see it as their
job to insure manufacturers a profit.” Responses will vary in reaction to the quote. Possible
views such as the following could be mentioned:
a) Companies that are serious about quality will know what the customer wants and operate accordingly
with attention to the costs of providing what sells. The text gives several ways in which organizations
can be tuned to customer wants.
b) Companies try to sell what they, the company, think is quality because they have expended large
amounts of resources to obtain a particular feature but the feature is not what the customer wanted.
R. J. Reynolds spent a lot of money and time to develop a smokeless cigarette in response to concerns
about the harmful effects of cigarette smoke. Perhaps, if the product itself would have tasted better,
the company might have had a chance with it.
c) The companies that lead a trend are often the ones who do not survive. The product may have been
of higher “quality” than ones to follow but possibly the market was not ready for that product, the
price was too much to generate large amounts of sales, or the product could not stand on its own and
needed complementary products to make it worthwhile.
264 Chapter 19
4. Provide examples of nonfinancial quality measures of customer satisfaction and internal
performance
How can “nonfinancial” factors be measured? In the lists of nonfinancial factors in the text,
the measures are a result of counting (number of) and of comparing (ratio of or percentage of). Counting
may not be measurement though it can be a part of measuring. Given a span of time, for example, counts
can be turned into trends or dimensions that would be considered measurement.
What is the difference between counting and measuring? Measure is a relative term, a comparison
between two things. Typically one of those “things” is a standard or agreed-upon amount, such as inches
or centimeters. Thus, the counts that turn into trend numbers become measurements by their being in
comparison of one year to the next. The popular saying, “You get what you measure,” highlights the
importance of measuring. The nonfinancial measures mentioned in the text use numbers as measurement.
Nonfinancial measures could simply be, “this is better than that,” or “this is not as good as that one.”
Relating one thing to another is a measurement..
Student grades are measures, and in some graded courses, numbers are never used, only letters, in the
grading scheme. The rubric used for a course may be a set of guidelines defined by a letter grade that has
been agreed upon by those who teach the classes. Students do like to know how the grading will be done.
“How the game is scored influences how it will be played.” The same is true for the measures used in a
company for internal performance or customer satisfaction.
5. Describe the benefits of financial and nonfinancial measures of quality
Discuss the issue of using one set of measures to make a decision and another set of
measures to evaluate the results of the decision. [Refer to Chapter 11, Learning Objective 9]
The set of measures used to decide upon a particular action or strategy leading to specific actions should
be clearly identified. Financial measures such as costs of rework, costs of design engineering or process
engineering, and costs of inspection and testing in relation to revenue can be used in the decision to
choose one alternative over another. The information system could be designed so that those same types
of costs could be tracked and compared for evaluation purposes.
As noted in Chapter 11, events and combinations of factors influence the action taken from a decision
made. In few instances does one find a clear cause-and-effect situation. The same could happen with
nonfinancial measures. Consider the airline industry. After the tragedy of September 11, 2001, involving
the World Trade Center, the airline industry sought relief from the actions taken in response to the
terrorists’ actions—grounding all air traffic. Some airlines laid off thousands of employees following the
events. They focused on the tragedy and its impact on their costs and operations—a type of cause and
effect. At the time some analysts stated that those airlines were facing problems before the 9-11-01
events occurred and the tragedy gave excuse for the lay-offs. Which set of measures should be used in
evaluating the situation—tragic events of the day and thousands of people losing their jobs, or
management problems from the time leading up to the tragic events?
Quality, Time, and the Theory of Constraints
265
6. Describe customer-response time and explain why delays happen and their costs
How does the concept of “statistical fluctuations” affect customer-response time or ontime performance? Statistical fluctuation is relevant to customer-response time or on-time
performance. Customer-response time consists of four sequenced parts—receipt time, waiting time,
manufacturing time, and delivery time. This is similar to a relay race with four runners. Any more or less
time taken by the first runner impacts the subsequent racers and so on down the line. When the last
runner gets the hand off, s/he has to run based upon what has happened with the three previous runners.
In some instances, the race could have already been lost to that relay team when the last runner gets the
baton. Each runner’s time will fluctuate within a range of time every time s/he runs. The placement of the
runners is carefully made to capture the strengths of that runner for a given position within the team.
Statistical fluctuation uses averaging. Most are familiar with this concept in the commute to work. The
commute takes 35 minutes each way, depending upon the traffic. Some days the trip takes over an hour
(traffic accident right ahead with no avenue for detouring) and some days it takes less than 25 minutes
(school holiday and no school buses in the way). As most people cannot go “as the crow flies,” the trip
involves a sequence or route.
For any sequenced process, careful consideration must be made about the dependency of the last part
upon the first and middle parts. More wiggle room or capacity might be necessary for some aspects of the
process while more controls should be in place for the others. If any one part is defined as fixed, with
little or no opportunity for variation, those activities preceding the fixed portion will directly affect the
activities following the fixed portion. (An example would be if, in the relay race, one leg of the race was
“run” by a machine that was programmed to move at one set speed, and this was in place for each team.)
7. Apply the three measures in the theory of constraints
In earlier chapters, direct manufacturing labor was considered a variable cost with
respect to units produced. Direct manufacturing labor, however, is considered an
operating cost and expensed in the time period incurred regardless of volume of
production according to the theory of constraints. Why does this difference exist?
The theory of constraints is a short-run concept. In the short run, nearly all costs are considered fixed
because little opportunity exists to change them. Given enough time, most costs can be considered
variable because changes can be made to them. A manager needs to understand the short run as well as
the long run. Knowing when to use concepts and methods appropriate for those circumstances that need
short-run decisions and when it is appropriate to use long-run concepts and methods identifies the good
managers. An example is the special order situation. A manager has to decide if a special order is indeed
a one-time-only special order for which it is appropriate to use relevant or incremental revenues and costs.
Perhaps the special order is indicative of a series of events that are more long run in substance and the
manager should use full costs to decide what action to take. The accounting convention of “substance
over form” is helpful in most circumstances. The management accountant can assist the manager in
identifying the true nature of the situation rather than what it may appear to be.
266 Chapter 19
8. Manage bottlenecks
How can a bottleneck situation exist and a manager not know about it? Defining a situation
or problem can be the first step in managing it. If a situation develops gradually over time, a manager
might not be as apt to recognize the importance of it as would someone who had a different perspective.
A bottleneck situation exists as a part of a whole system in which some operations are nonbottleneck and
some are bottleneck. In the exercise for Learning Objective 6 in this section, a relay race was used to
illustrate a system with dependent operations. If, for example, one leg of the race was considered a
bottleneck because of the constraints it put on the entire race, the other sections of the race should be
managed toward maximizing time during that bottleneck section. A manager, or in this example a coach,
who was knowledgeable about the whole system, would probably understand the role that the constraint
put on the system. If each leg of the race had a different coach, or manager, the constraint would not
necessarily be noticed for what it was to the whole of the system.
Quality, Time, and the Theory of Constraints
267
SUGGESTED READINGS
Anderson, S. and Sedatole, K., “Designing Quality into Products: The Use of Accounting Data in New
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Chua, W. and Petty, R., “Mimicry, Director Interlocks, and the Interorganizational Diffusion of a Quality
Strategy: A Note,” Journal of Management Accounting Research (Vol. 11-1999) p. 93 [12p].
Cooper, R. and Chew, W.B., “Control Tomorrow’s Costs Through Today’s Designs,” Harvard Business
Review (January-February 1996) p.88 [10p].
Deming, W. Edwards, “On Some Statistical Aids Toward Economic Production,” Interfaces (August
1975) p.1 [16p].
Garvin, D., “Competing on the Eight Dimensions of Quality,” Harvard Business Review (JanuaryFebruary 1987) p.101 [10p].
Goldratt, E. and Cox, J., The Goal, 2nd Ed., (1992) North River Press, Inc.
Hayzen, A. and Reeve, J., “Examining the Relationships in Productivity Accounting,” Management
Accounting Quarterly (Summer 2000) p.32 [8p].
Kershaw, R., “Using TOC to ‘Cure’ Healthcare Problems,” Management Accounting Quarterly (Summer
2000) p.22 [7p].
Lucier, G. and Seshadri, S., “GE Takes Six Sigma Beyond the Bottom Line,” Strategic Finance (May
2001) p.40 [6p].
Nagar, V. and Rajah, M., “The Revenue Implications of Financial and Operational Measures of Product
Quality,” The Accounting Review (October 2001) p.495 [19p].
Rao, M., “A Simple Method to Link Productivity to Profitability,” Management Accounting Quarterly
(Summer 2000) p.12 [6p].
Roehm, H. and Castellano, J., “The Danger of Relying on Accounting Numbers Alone,” Management
Accounting Quarterly (Fall 1999) p.4 [6p].
Roehn, H., Weinstein, L. and Castellano, J., “Management Control Systems: How SPC Enhances
Budgeting and Standard Costing,” Management Accounting Quarterly (Fall 2000) p.34 [7p].
Taguchi, G. and Clausing, D., “Robust Quality,” Harvard Business Review (January-February 1990)
p.65 [11p].
Tatikonda, L., O’Brien, D. and Tatikonka, R., “Succeeding with 80/20,” Management Accounting
(February 1999) p.40 [5p].
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