Throughput is defined as the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which intends to sell, and operational expense is all the money the system spends in order to turn inventory into throughput. Then it turns out that the goal of an organization is to increase throughput while simultaneously reducing both inventory and operating expense. To help Alex in achieving his goals and solving problems in his plant in terms of the measurements which express the goal of making money, Jonah introduces him the theory of constraints. Theory of constraints approach includes the following steps to improve the performance of a system: Identify the system's constraint(s)
Decide how to exploit the system's constraint(s)
Subordinate everything else to exploit the constraint(s)
Elevate the system's constraint(s)
If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system's constraint. Theory of constraints approach requires answering three basic questions. These questions are: What to change?
What to change...