Designing the Profit Maximization Model of Companies Using the Theory of Constraints

Authors

  • Hamidreza Bijannia‎ * Department, Accounting Campus, Kish Branch, Islamic Azad University, Kish, Iran.
  • Fatemeh Dekamini Member of the Research Faculty of Mahan Business School, Tehran, Iran.

https://doi.org/10.22105/tqfb.v1i2.33

Abstract

The purpose of this research is to design a profit maximization model for companies using the theory of constraints. To collect information, library and field studies were used, according to the method of data collection, documents, interviews and questionnaires were used, so the current research method is mixed (qualitative and quantitative). The statistical population of the research in the qualitative part included experts, professors and specialists in the field of management accounting, 10 of whom were selected by snowball sampling until theoretical saturation was reached, and primary data were collected through interviews and a questionnaire was designed. A questionnaire was included in the quantitative part as well. All managers and assistants of the finance and accounting departments of manufacturing companies admitted to the Tehran Stock Exchange were an unknown number. According to Cochran's second formula, 385 people were selected by available sampling. A questionnaire with 78 questions was used to check the research variables. Cronbach's alpha coefficient confirmed the reliability of the questionnaires, 10 interviewees confirmed the content validity of the questionnaires, and their construct validity was confirmed by confirmatory factor analysis. Then, the data obtained from the questionnaire was analyzed in two sections: descriptive statistics and inferential statistics. In the section on inferential statistics, the Kolmogorov-Smirnov test was used to check the type of data distribution in terms of normality or not, and then confirmatory factor analysis by LISREL 8.80 software. In order to check the construct validity of the questionnaire and to test the structural equation model with the help of Lisrel SmartPLS.03 software, it has been used to answer the research questions. The most important findings of the research showed that the components of identifying the limits of profit maximization, exploiting the limits of profit maximization, spreading the effect of profit maximization decisions, removing system limitations, and the process of continuous improvement of profit maximization, respectively, with a path coefficient of 0.41, 39 0.0, 0.43, 0.37, 0.40 have a positive effect on the theory of limitations.

Keywords:

Profit maximization‎, Theory of constraints‎, Manufacturing companies‎, Tehran Stock Exchange‎

References

  1. [1] Qizi, S. A. A. (2022). The use of modern information technologies in the process of studying the theory of limits. Academicia: an international multidisciplinary research journal, 12(5), 415–419. https://doi.org/10.5958/2249-7137.2022.00447.5
  2. [2] Maha K. Jawad, O. F. H. A. O. (2021). Using the theory of constraints as a tool to lean inventory - a case study in diyala state company. Al-rafidain university college for sciences, 1(50), 162–172. https://www.iasj.net/iasj/article/221784
  3. [3] Giorgione, G. (2021). Dynamic pricing strategies in the carsharing business, profit maximization and equity considerations. https://orbilu.uni.lu/handle/10993/48080
  4. [4] Sahibipur, P., & Fatehi, Y. (2019). Leveling of scoring indicators on profit valuation in insurance companies using Interpretive Structural Model (ISM). New research approaches in management and accounting, 3, 67–80. (In Persian). https://elmnet.ir/doc/2228151-32681?elm_num=1
  5. [5] Bahmani, M., & Taheri, S. S. N. (2019). Investigating the smoothing of profit on the reduction of stock price reduction in Tehran Stock Exchange using accounting and subtraction methods. Carafen, 16(46), 253–274. (In Persian). https://elmnet.ir/doc/2284542-32251?elm_num=1
  6. [6] Zakir, M., & WaziriGohar, H. (2019). Management of critical management in projects with theories. The first national conference of business management, entrepreneurship and accounting. Civilica. (In Persian). https://civilica.com/doc/920367/
  7. [7] Zare, Z., & Shakarian, H. (2020). Spreading and evaluating the theory of limitations and creating reactions in accounting and management culture. The fifth international conference of knowledge and technology of the third millennium of iran’s economy, management and accounting. Civilica. (In Persian). https://civilica.com/doc/1435221/
  8. [8] Baki, S. M., & Cheng, J. K. (2021). A linear programming model for product mix profit maximization in a small medium enterprise company. International journal of industrial management, 9, 64–73. (In Persian). https://doi.org/10.15282/ijim.9.0.2021.5956
  9. [9] Tsionas, M., Patel, P. C., & Guedes, M. J. (2022). Endogenous efficiency of the dynamic profit maximization in the intertemporal production models of venture behavior. International journal of production economics, 246, 108411. https://doi.org/10.1016/j.ijpe.2022.108411
  10. [10] Schipper, K. (1989). Commentary on earnings management. Accounting horizons, 3(4), 1–91. https://openurl.ebsco.com/EPDB%3Agcd%3A7%3A10402935/detailv2?sid=ebsco%3Aplink%3Ascholar&id=ebsco%3Agcd%3A4816073&crl=c
  11. [11] Soleimani, S. (2018). Analyzing and investigating the retailer’s profit in the electricity market based on risk modeling and load response. The 6th sird regional conference. International journal of production economics. (In Persian). https://doi.org/10.1016/j.ijpe.2022.108411
  12. [12] Weersink, A., & Fulton, M. (2020). Limits to profit maximization as a guide to behavior change. Applied economic perspectives and policy, 42(1), 67–79. https://doi.org/10.1002/aepp.13004
  13. [13] Rastgar, M. (2022). Investigating the relationship between management profit and relationship management in companies listed on the stock exchange. The second international conference on research findings in management, economics and accounting, Tehran, Iran. Civilica. (In Persian). https://civilica.com/doc/1488336/
  14. [14] Mohebrad, M. (1401). Profit management and investment of companies with return on equity. Accounting and management perspective, 5(63), 105–119. (In Persian). https://elmnet.ir/vslgg?id=2688624-73191
  15. [15] Cassar, L. (2019). Job mission as a substitute for monetary incentives: benefits and limits. Management science, 65(2), 896–912. https://doi.org/10.1287/mnsc.2017.2903
  16. [16] Sabot, M. E. B., De Kauwe, M. G., Pitman, A. J., Medlyn, B. E., Verhoef, A., Ukkola, A. M., & Abramowitz, G. (2020). Plant profit maximization improves predictions of European forest responses to drought. New phytologist, 226(6), 1638–1655. https://doi.org/10.1111/nph.16376
  17. [17] Nejabat, A., Hosseini, H., & Ahmadi, J. Y. (2019). Investigating the relationship between applying theory and improving competitive position considering the role of a strategic strategy in sports clubs. The 3rd national sports communication conference: communication literacy and media literacy in sports. Civilica. (In Persian). https://civilica.com/doc/1251183/
  18. [18] Ghasemi, A., Mohammadi, H., & Shujaei, H. (2017). Production identifications and providing improvement solutions with the adjustments of theories. The second international conference on management and accounting, Tehran, Iran. Civilica. (In Persian). https://civilica.com/doc/643177
  19. [19] Jamalmanesh, A., Saifi, A., Khodaprest Mashhadi, M., & Falahi, M. A. (2019). Presenting a non-linear model for mechanizing the profit of electric power plants in the long term. Energy economics studies, 16(67), 1–32. (In Persian). https://elmnet.ir/doc/2391394-71942?elm_num=1
  20. [20] Kirche, E. T. Kadipasaoglu, S. N. & Khumawala, B. M. (2005). Maximizing supply chain profits with effective order management: integration of activity-based costing and theory of constraints with mixed-integer modelling. International journal of production research, 43(7), 1297–1311. (In Persian). https://doi.org/10.1080/00207540412331299648
  21. [21] Berry, R., & Smith, L. B. (2005). Conceptual foundations for the theory of constraints. Human systems management, 24, 83–94. https://doi.org/10.3233/HSM-2005-24107
  22. [22] Saadati, E., & Mohammad Nazzad Shorkai, H. (2018). Optimum planning of response to profit with the aim of calculating the retailer and using the stock market algorithm. The 6th sird regional conference, Tehran, Iran. Civilica. (In Persian). https://civilica.com/doc/1459360/
  23. [23] Dinkani, S., & Ebrabi, M. (2017). Providing a model with traceability in the sustainable supply chain of the poultry industry based on the score model and the theory of constraints. The third international conference on industrial management and engineering, Shiraz, Iran. Civilica. (In Persian). https://civilica.com/doc/756839/
  24. [24] Picciotto, R. (2005). The value of evaluation standards: a comparative assessment. Journal of multidisciplinary evaluation, 2(3), 30–59. https://doi.org/10.56645/jmde.v2i3.100
  25. [25] Chan, F. T. S., & Chan, H. K. (2005). Simulation modeling for comparative evaluation of supply chain management strategies. The international journal of advanced manufacturing technology, 25, 998–1006. https://doi.org/10.1007/s00170-003-1920-7

Downloads

Published

2024-08-20

Issue

Vol. 1 No. 2 (2024): Transactions on Quantitative Finance and Beyond

Section

Articles

Categories

How to Cite

Bijannia‎, H. ., & Dekamini, F. . (2024). Designing the Profit Maximization Model of Companies Using the Theory of Constraints. Transactions on Quantitative Finance and Beyond, 1(2), 142-158. https://doi.org/10.22105/tqfb.v1i2.33
Crossref
Scopus
Google Scholar
Europe PMC

Similar Articles

1-10 of 23

You may also start an advanced similarity search for this article.