About this Presentation
Concentrating on the specific area of decisions where management accounting has a devastating impact. The webinar first inquire into the real faulty assumption behind the concept of 'cost-per-unit'. Understanding the flaws of the concept is a key to understand the current reluctance of replacing cost-per-unit with something else. But, does the current BOK of TOC offer a full support to the decisions currently supported by the 'cost-per-unit'? The webinar discusses some common misunderstanding of the theory of constraints (TOC) concepts, notably how the T/CU might lead to wrong decisions. Thus the boundaries of the current knowledge of TOC regarding throughput accounting are properly understood, and the difficulty in providing a wider support to these decisions are discussed in order to pave the way for a direction of solution. The role of uncertainty in such decisions is brought up. The impact of the current lack of tools to support those decisions is demonstrated by a leading example. In this series Eli Schragenheim (the other Eli) wishes to think aloud on how TOC guides us to be better decision makers. The most interesting question to be dealt in the series is what 'hard decisions' are and how to make them 'not-too-hard decisions'? There are two different categories of causes for the difficulty to arrive to a clear decision: complexity and uncertainty. Complexity is nicely handled by TOC through focusing and outlining the cause-and-effect relationships of the most critical elements. In itself this is already a valuable addition to the work of Herbert Simon, another influential figure on management. Uncertainty is another element where TOC has provided certain solutions for some specific cases, but, yet, does not provide a generic way to systematically deal with uncertainty.
What Will You Learn
To help you get the most value from this session, we’ve highlighted a few key points. These takeaways capture the main ideas and practical insights from the presentation, making it easier for you to review, reflect, and apply what you’ve learned.
The session reveals why making decisions based on a single aggregated number can be misleading in complex environments—because uncertainty and multiple interacting variables distort simple metrics.
It shows how simplifying complex decisions requires focusing only on the most significant uncertain variables, enabling leaders to make defensible choices without being overwhelmed by noise.
The presentation illustrates how building paired scenarios (optimistic and pessimistic) helps organizations understand ranges of outcomes and prepare decision options that are robust under different conditions.
It emphasizes that real decisions—such as what to produce, where to compete, and when to commit—must consider capacity limits, economic viability, and practical uncertainty ranges rather than relying solely on idealized cost or demand models.
Instructor(s)
Eli Schragenheim
Eli Schragenheim is a well-known international management educator, author and consultant active in various fields of management. He worked with a huge variety of organizations all over the world, including public-sector organizations, industrial, high-tech and start-ups. Since he had joined Dr. Eliyahu M. Goldratt, the famous creator of the Theory of Constraints (TOC) in 1985, Eli Schragenheim had taught, spoke at conferences, and consulted all over the globe. Eli Schragenheim is the author of several books on various aspects of management. His last book, Throughput Economics – Making Good Management Decisions, together with Henry Camp and Rocco Surace, was published in July 2019. Eli Schragenheim first book Management Dilemmas (1998) showed a variety of problematic situations in management and the rigorous analysis leading to the right solution. Next he collaborated with William H. Dettmer in writing Manufacturing at Warp Speed. In this book the new concept of Simplified-DBR, now a key concept in production planning according to TOC, was introduced. He collaborated with Carol A. Ptak on ERP, Tools, Techniques, and Applications for Integrating the Supply Chain, and with Dr. Goldratt and Carol Ptak on Necessary but Not Sufficient. In 2009 his book Supply Chain Management at Warp Speed, with William H. Dettmer and Wayne Patterson was published. In March 2015, Eli has opened a blog, now containing more than 140 articles on various topics in TOC that everybody can access.