Profit Optimization Through the Application of Theory of Constraints (TOC): A Case Study in Printing Company

Abstract

Globalization has made industrial competition to become intensified and more stringent. As technology advances, traditional management is deemed insufficient to meet the needs of many companies in order to achieve their goals. The theory of constraints is considered to be a pertinent method to overcome the faced challenges. The theory is aimed to effectively manage constraints that prevent companies from achieving their goals. It is focused on enhancing system capacity constraints and minimizing inventory and operating costs to increase the profit by managing company's resources efficiently. The purpose of this study is to apply the theory on a case study in a printing company to manage obstacles in an effective way by defining constraints that prevent the company from achieving its targets. Thus, it can increase the company's profitability. Results show that there are capacity constraints on glue and laminating machine causing the company to solely produce 72.06% of the total demand. It is suggested that if the company adds one more laminating glue machine, an increasing profit as much as 22.33 % can be attained.