The Goal Book Report

The Goal is a very amazing book. Before I read the book, I think many concepts about management and production are boring and hard to understand. However, in this book, Goldratt explained many operational production concepts, especially the theory of constrains clearly with lots of good examples from Alex’ plant. Although the book describes manufacturing operations, but it can be useful for most types of situations in our life. Like the main character, Alex Rogo, who is a manager of a plant owned by UniCo Manufacturing. And he was asked to improve the production of the plant in three months, meanwhile, he had a big conflict with his wife because he put too much effort into work. So, Alex used knowledge that he learned from Jonah

Jonah described that “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”. (page 60 Jonah) These three terms measure whether a firm performs well and achieve its final goal: to makes money. Throughput is related to the value added by the system. Inventory is the money inside the system, including all investment such as plant, property, equipment etc. and operational expense is the money we invest to make throughput happen. The Goal also introduced the concept of bottleneck and described “a bottleneck is any resource whose capacity is equal to or less than the demand placed upon it” (page 139 Jonah). It is important for a plant to find its bottleneck which limit the process of production. So many bottlenecks can be found in our daily life. For example, around 8 to 10 am in every morning, there are thousands of people waiting long time in the trains stations to go to work. In this situation, trains become bottleneck in the process which transport people from home to the

First, he told Alex that the plant should balance flow rather than capacity. During the manufacturing of a product, both faster and slower processes will be involved, so we should help to achieve continuous flow of materials. Second, there is nothing to do while waiting for the bottleneck to finish its batch, so workers are busy to shift between different batch areas. To avoid this, Alex discovered how to process more parts by mixing and matching orders by priority to increase efficiency. Third, Alex wanted to increase demand from market. Jonah also suggested reducing the batch sizes down to half of their current level. Doing so could potentially reduce inventory levels by half and they could achieve faster response times and shorter times for orders. Last, the firm found that new orders may create new bottleneck, so they should increase the inventory in front of the bottlenecks to ensure utilization of their full capacity. This will increase cycle times and hence the sales team can promise to fulfill new