4. Proposed Pricing Method
This method focuses on capacity utilization and assumes that there is always a
bottleneck (internal or external) in the supply chain that commands the speed with
which the products can be completed. Following are the few general definitions as per
TOC terminology to keep in mind before we proceed. Throughput (T) is the rate at
which an organization generates money through sales. Operating expenses (OE) is all
the money the system spends in order to turn inventory into throughput.