MANAGEMENT AND ACCOUNTING WEB | Maaw Home | Contents | Bibliography | Maaw 's Book | Books | Journals | Summaries | Marketplace | Software | Gadgets | Introduction | Main Topics | Search maaw | Grad Course | Textbooks | Journal Bibs | Links | Maaw 's Blog | Videos | Contribute | Goldratt, E. M. and J. Cox. 1986. The Goal: A Process of Ongoing Improvement. New York: North River Press.Summary by Chris Hourigan University of South Florida, Spring 2001 | The Goal is a very compelling novel. Novel, HUH!! Who ever heard of a novel about a production plant? Well, Eli has made the production managers have quite an epiphany. In one book he might have changed the whole world of cost accounting. Eli approached the production world with a …show more content…
Net profit needs to increase along with simultaneously increasing return on investment and cash flow. Now all that is needed is to put his specific operations in those terms. Chapter Seven | Alex makes the decision to stay with the company for the last three months and try to make a change. Then he decides he needs to find Jonah. Chapter Eight | Alex finally speaks to Jonah. He is given three terms that will help him run his plant, throughput, inventory, and operational expense. Jonah states that everything in the plant can be classified under these three terms. "Throughput is the rate at which the system generates money through sales." "Inventory is all the money that the system has invested in purchasing things which it intends to sell." "Operational expense is all the money the system spends in order to turn inventory into throughput." Alex needs more explanation. Chapter Nine | Alex fresh off his talk with Jonah gets word that the head of the company wants to come down for a photo opportunity with one of Alex’s robots. This gets Alex thinking of the efficiency of these robots. With the help of the accountant, inventory control woman, and the production manager, Alex discovers the robots increased costs, operational expenses, and therefore were less productive. Implementing the robots increased costs by not reducing others, like direct labor. The labor was shifted to other parts of the plant.
Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.
The second time Alex spoke to Jonah was after finding his contact information in his old address book. During this conversation, Alex realizes that accustomed profitability measures cannot be applied to the plant he is managing and he must follow measures that better relate to his individual plant. Jonah teaches Alex three
It is stressed in the Goal that there is a massive difference between throughput and efficiency. The novel makes the case that having an efficient operation does not equate to profitability. What does equate to profitability is to increase the throughput of any given operations system. Jonah tells Alex, “Throughput, is the rate in which the system generates money through sales.” (Goldratt, E.M. (2014), The Goal, pg. 60). Jonah goes on to explain to Alex that inventory is all the money that was invested in purchasing things that the system intends to sell. (Id). Furthermore, operational expenses are those costs that are required to turn inventory into throughput. (Id, at pg. 61). The definitions of these three measurements are not standard definitions for an MBA student. It is an interesting perspective on how to view operations.
14. A decision to work closely with a limited number of suppliers for the purpose of ensuring that the proper materials are available at the optimal time is an example of:
The novel, “The Goal: A Process of Ongoing Improvement”, by Eliyahu Goldratt focuses on a production plant that has a failing system which can potentially shut down if the system that it operates under does not right itself and show improvements. The book is structured like a business textbook but is written as a novel. “The Goal” uses a scenario in the production world that can occur to any production manager. Eliyahu Goldratt uses the main character, Alex Rogo a plant manager with UniCo Company for the past 15 years, puts him in the students seat. It helps business students learn with Alex and makes it very relative.
Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.
For instance, the technical advances rendered these the previous measures less effective, since they concentrated on item costs, while TOC focussed on the working environment, dedicated expenditure, and the limitations associated with capacity, which in turn leads to the bottlenecks. Further, in contrast with the past measures, operational expense takes account of manufacturing outflows, wages, besides the administrative costs. It has also been established from the definition of throughput that revenue is earned from the sale of products, whereas the conventional definition of productivity simply revolves around amount produced per unit of time, which in essence does not generate profits. Therefore, there was an agreement that the measures proposed by Jonah, provide a more factual product cost and it generates more revenue, thus, management will be in a better position to
Alex stumbles upon his old professor Jonah, who introduced him to the theory of constraint. Jonah states three essential tools of measurement for everything in the plant "Throughput is the rate at which the system generates money through sales."; "Inventory is all the money that the system has invested in purchasing things which it intends to sell"; and "Operational expense is all the money the system spends in order to turn inventory into throughput" (Goldratt & Cox, 1984, pp. 60-61). These new ideas create a puzzle for Alex: What is the goal of Unico manufacturing plant? He keeps wandering and drifting his thought about what the goal of his plant is. After food and beer, it strikes Alex that the ultimate goal is to make money (Goldratt & Cox, 1984, p. 41). In order to make more money for the plant there should be an increase in throughput and a decrease in inventory as well
Throughout the entirety of the book, The Goal: A Process of Ongoing Improvement, author Eliyahu M. Goldratt focuses on demonstrating the importance of the Theory of Constraints and what corporations should do in order to increase profits. A major term used throughout the novel is “throughput,” which according to the text, is “the rate at which the system generates money through sales” (Goldratt 60). Once a bottleneck machine in a production process is identified, there are multiple ways to increase throughput without expanding the physical capacity of the machine.
Despite his many efforts to tighten operations while continuing to grow the business, the new
In the article Aims, Goals and Objectives, Nel Noddings states that “Aims are used not only to derive goals and objectives but also to evaluate them.” (Noddings, Aims, Goals and Objectives, 2007). She also believes that educational aims should be directed towards making the lives of everyone full and satisfying as opposed to changing all people into members of the educational elite (Noddings, Aims, Goals and Objectives, 2007). Reflecting on these points has brought up a facet of the aims argument that I had not previously considered and has helped me identify areas for improvement in my teaching career. In the paragraphs that follow, I will first provide a summary of the article that details the author’s main ideas and key points and then I
The Goal a Process of Ongoing Improvements was Dr.Eliyahu M Goldratt first book. It is a fiction business management novel that primarily focuses on the theory of constraints. The author Goldratt is a critical acclaimed Israeli business manager, physicist professor, and author. He is thought of as the guru of business operation. Goldratt is the creator of optimized production technique and the theory of constraints. He also is the author of the following books: Production the TOC way, IT’S Not LUCK, Critical Chain, Necessary but not sufficient, ISNT It Obvious, The Choice, The Race, What is This Thing Called: theory of constraints, and The Haystack Syndrome.
The book is about a plant manger in a manufacturing company, Alex, who was hired in this position six months ago. His plant was suffered because it was running with neither profitability nor productivity. His boss, Mr. Peach, told Alex that the plant will be shut down in three months unless shows some improvements. Alex then, meets with
Alex Rogo is manager for one of UniCo's production plants. Recently Alex's plant, as well as the others in his division, have been having major problems shipping orders on time. The company has considered closing the plant and has given Alex only three months to make a significant improvement or the plant will be closed and he as well as all of his employees will be without a job. At this point everything seems to be crashing down around him while at a meeting, discussing the future of the division, he recalls a chance encounter with an old acquaintance, a physicist named Jonah. During their discussion Alex discovers that Jonah is currently involved in the science of manufacturing organizations. Intrigued Alex
I read the fictional book called, The goal: A process of ongoing improvement by Eliyahu M. Goldratt and Jeff cox. Goldratt has an extensive history of writing novels about business problems and their solutions. His list of work includes; The race, The haystack syndrome, What is This Thing Called Theory of Constraints and How Should it be Implemented?, It’s not luck, critical chain, and necessary but not sufficient. With his most recent work being in 2009 called Isn’t it obvious focusing on retail. The authors purpose for writing this book would be to educate and show examples on how to think outside the box or solve solutions, possibly even save companies. In his own words, “This book is an attempt to show that we can postulate a very small number of assumptions and utilize them to explain a very large spectrum of industrial phenomena” (Goldratt, Intro to revised edition page 2). He states he wants to show that these methods aren’t fantasy and have been/are working in pants around the world, and says that, “Finally, and most importantly, I wanted to show that we can all be outstanding scientists. The secret of being a good scientist, I believe, lies not in our brain power. We have enough. We simply need to look at reality and think logically and precisely about what we see” (Goldratt, Introduction page 2). This story is about a failing or close to failing manufacturing plant in a place called Bearington. The novel begins with the main character Alex Rogo, a