what is throughput 
throughput in business is the amount of a product or service that a company can produce and deliver to a client within a specified period of time the term is often used in the context of a company s rate of production or the speed at which something is processed businesses with high throughput levels can take market share away from their lower throughput peers because high throughput generally indicates that a company can produce a product or service more efficiently than its competitors understanding throughputthe idea of throughput also known as the flow rate is part of the theory of constraints in business management the guiding ideology of this theory is that a chain is only as strong as its weakest link the goal for business managers is to find ways to minimize how the weakest links affect a company s performance and to maximize throughput for the product s end users once throughput is maximized by removing inefficiencies allowing inputs and outputs to flow in the most ideal manner a company can reach revenue maximization a company s level of production capacity is closely related to throughput and management can make several types of assumptions about capacity if the company assumes that production will operate continually without any interruptions management is using theoretical capacity but this level of capacity is not reachable no production process can produce the maximum output forever because machines need to be repaired and maintained and employees take vacation days it s more realistic for businesses to use practical capacity which accounts for machine repairs wait times and holidays only products that are actually sold count toward throughput factors affecting throughputa company s throughput also depends on how well the company manages its supply chain which is the interaction between the company and its suppliers if for whatever reason supplies are not available as an input to production the disruption has a negative impact on throughput in many cases two products may start in production using the same process which means that the joint costs are allocated between each product when production reaches the split off point however the products are produced using separate processes this situation makes it more difficult to maintain a high level of throughput formula and calculation of throughputthroughput can be calculated using the following formula 