Allow me to start by saying “The Goal” was truly an enjoyable experience in learning the fundamental concepts of operations management. This was a non-traditional and fun way to gain knowledge. I would have never imagined learning such “operational principles” in an entertaining manner. Bravo Professor Kouvelis for instituting education in creative and informative way. Now, on to the questions at hand…
1. Give me the definitions of throughput, inventory and operational expense given in The Goal. How do they compare with the traditional definitions? Do you find them useful, and why?
In the goal 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 (sales). The key takeaway is looking at theses 3 measures as components of sales (end goal), not production…which is the traditional definition. It begs the question, “what good is it to produce something and not sell it?” The goal is not to merely produce but to make money. The Goal’s cements the idea by making a case for managers to focus on the end goal (making money) common sense can be applied to operational management.
2. Give me the definition of a bottleneck operation. Develop your own simple example to demonstrate it to me. Describe two or three different ways to discover the bottleneck of a process.
In The Goal, Jonah explains a Bottleneck, “is any resource whose capacity is equal to or less than the demand placed on it. Simply put… a bottleneck is “congestion” at any given point in a flow process. The idea is to reduce congestion by balancing the flow. Ideally the flow process should be a little less than the market demand in order to eliminate a bottleneck. When plants keep flow equal to demand if the demand goes up the bottleneck ensues, if demand goes...
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