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Eliyahu Goldratt's "The Goal" is an entertaining novel and a thought provoking business book. It is based around the life of Alex Rogo, a recently transferred manager of one of the plants of UniCo Manufacturing Corporation, located in a slowly declining industrial town (LOCATION). After a very upset customer approaches Alex’s boss, Bill Peach, gives an ultimatum to turn the plant around in three months. With very few hopes, Alex foresees the inevitable until he remembers his conversation with Jonah, a physicist Alex knew. Jonah introduces him to the Theory of Constrains (TOC). TOC postulates that for an organization to have an ongoing process of improvement, it needs to answer three fundamental questions:
1. What to change?
2. To what to change?
3. How to cause the change?
Alex gathers his department heads into a team. Alex and his team threw out a lot of questions concerning daily operations, procedures and in some cases, abandoned company policies to try new methods. When they could not come up with a plan, Alex contacts Jonah .During the conversation, Jonah asks him several questions to analyze his company’s situation. The conversation leads ultimately to the question, "What is the goal of any business?" Alex realizes that the goal of any business is to make money, any action toward this goal is considered to be productive and any action not moving towards the goal is nonproductive. Alex unsure of an answer decides to contact Jonah to continue the search.
Once Alex contacts Jonah they define the measurements to define the success of any plant’s production:
* Throughput = rate that the system is used to generate money through sales. This measurement would consist of what a product would be worth when sold at market value after deducting operational expense and inventory.
* Inventory = all the money invested in purchasing items that will be sold.
* Operational expense = all the money used to turn inventory into...
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