Throughput
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Definition of 'Throughput'In business, the rate at which an organization reaches a given goal. Throughput is generally viewed as the rate a business is able to produce a product or service for a given unit of time. Businesses with high throughput (output) levels are able to be more competitive than lower throughput firms because they are able to produce a given product or service more efficiently. |
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Investopedia explains 'Throughput'The idea of throughput is part of the Theory of Constraints of business management. The guiding ideology of the Theory of Constraints is that a chain is only as strong as its weakest link. Advocates of the theory attempt to minimize how weak links affect a company's performance. Additionally, firms will often measure throughput using Little's Law, which states throughput is equal to units produced divided by time. |
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