The theory of constraints and throughput accounting in service sector: An application in hotel

The Theory of Constraints has been developed by Eliyahu M. Goldratt in 1980s. According to this theory, the aim of the firms is to make money now and future. In the Theory of Constraints, firms are resembled to a chain and it is argued that the weakest link determines the whole power of the chain. In this context, firms are expected to exploit the constraint which is due to the weakest link. However, throughput accounting asserts that one needs to focus on not only the performance measures revealed by the Theory of Constraints, but also firms' throughput rather than costs as well. The purpose of this study is to investigate the constraints in a hotel operating in Zonguldak and to analyze the effects on the profits of this firm by removing the constraint - with reference to the Theory of Constraints and the principles of throughput accounting. This case study took place in between October 2013 and September 2014 where there has been a market constraint on July. Throughout the case, it is anticipated that new agreements of the firms with the tour agencies will increase the income from renting rooms by 10 percent. Based on the income statement prepared by calculating monthly throughputs, an increase in the firm's throughput and profit has been identified. Lastly, it is discovered that successful results can be achieved by applying the Theory of Constraints and throughput accounting in the service sector besides in the manufacturing sector. It is thought that this study will enrich the literature on these theories applied in the service sector.