ABSTRACT
In order to prove the fallacy of cost accounting, Dr. Goldratt imagined a simplistic organization selling only two products, P and Q, produced by only four resources, named according to their colors: Light Blue, Blue, Green and Gray. To further simplify matters, the weekly demand is known and does not vary. Capacities are straightforward: every resource works precisely eight hours a day, not one minute less or more, five days a week. That means that the available capacity of every resource, regardless of its color, is 2,400 minutes per week. The total weekly cost of providing this capacity, excluding the cost of materials, is $6,000. Demand for product P is exactly 100 units and for Q it is 50 units. These will be the weekly sales, as long as the system is able to provide those quantities by week's end. There is no chance to catch up next week.
