Theory of Constraints

Theory of Constraints definition - business

Theory of Constraints

A management philosophy of continuous improvement achieved by identifying and managing the most important constraint that affects quality and productivity. Successfully dealing with one constraint is followed by identifying and handling the next most important problem. For example, a business may determine that delivery delays are the result of excessive absenteeism. Initiating a bonus pay system may successfully deal with this constraint. The Theory of Constraints is credited to Israeli-born scientist and business consultant Eliyahu Goldratt.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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