Author(s): Ahmed Maher Mohammad Ali, Sahar Mahede Jabir
The paper seeks to demonstrate the ability of technology cost based on specifications and the theory of constraints (TOC) to help the company decide the optimal product mix. The article aims to allow managers to rationalize and optimize product-mix decisions. The attribute-based costing (ABCII) framework is used to improve the process to create optimal mix decisions. The company needs accurate cost information about its products' cost, and this information can technically be cost based on specifications provided. A range of constraints and limitations influences the company’s output, so the theory of restrictions and its ability to address bottlenecks is studied. The case study method was used, applied in the leather industry laboratories in Baghdad. The results show that the cost-based specification technology analyzes the product into a set of characteristics and features and accurately determines each specification's cost. This accurate information helps in making the decisions on the optimal product mix. The theory of restrictions is a crucial method for identifying bottlenecks and constraints, and dealing with them and eliminating their impact on the production process will help achieve maximum return. Therefore, the paper shows that the theory of conditions can be used in production-mix decisions.