This is the first criterion to examine when looking to place the constraint
— the effect on return on investment. In order to do this, ask these questions:
Where is your capital investment pooled? and What part of your
business represents the single largest investment of capital? The actual
amount is not significant, only its relationship to the other investments in
other areas of the business. For example, in one company I worked with,
they have a collection of horizontal boring mills that cost $2,000,000 apiece.
One of these will build a new plant! In another company, they have a
production line investment of $150,000. This area also happens to be the
focus of the labor intensity of the business. You see the extremes: both
represented significant capital investments for the businesses in which they
were. By exploiting your largest capital pool, you will increase your ROI by
maximizing its effectiveness.