Answer (C) is correct . A basic principle of TOC analysis is that short-term profit maximization requires maximizing the contribution margin through the constraint, called the throughput margin or throughput contribution.
Answer (A) is incorrect because Under the principles of TOC, maximizing the efficiency of processes that have excess capacity merely creates backup in the system.
Answer (B) is incorrect because Holding down direct materials costs, while an important part of improving contribution margin, is not part of a TOC analysis.
Answer (D) is incorrect because While eliminating backup is a goal of a TOC analysis, it is not done by simply “smoothing” production flow, since this could mean slowing down the entire process to match the bottleneck.
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