A retail company is experiencing stockouts of a popular product due to supply chain disruptions. Which of the following steps should the company take to address this issue according to the theory of constraints (TOC)?

The Theory of Constraints (TOC) focuses on improving system throughput by managing the bottleneck or constraint. The second of the five focusing steps is to "exploit the constraint," which means getting the absolute most out of the constrained resource without major investment. Optimizing capacity at the bottleneck work center—through better scheduling, ensuring it is never starved for work, and reducing downtime—is the direct application of this principle. This maximizes the output of the entire system, as the bottleneck's capacity dictates the system's capacity.

A. "Increase production" is the desired outcome, but "optimize capacity" is the specific TOC step or action taken to achieve that outcome.
B. Increasing finished goods inventory is a traditional "just-in-case" approach that TOC aims to minimize by improving flow and managing constraints effectively.
C. Reducing the workload at a critical resource (the bottleneck) is the opposite of the TOC approach, which seeks to maximize its utilization.

1. Goldratt, E. M. (1984). The Goal: A Process of Ongoing Improvement. North River Press. The book outlines the five focusing steps, with the second step being to exploit the system's constraint.

2. Jacobs, F. R., & Chase, R. B. (2018). Operations and Supply Chain Management (15th ed.). McGraw-Hill Education. Chapter 23, "Theory of Constraints," details the five-step process, explaining that exploiting the constraint involves maximizing its use.