The Goal Summary

Overhead costs are not in proportion to the production output because of the method they are using. This leads to inaccurate pricing and costing decisions. An Activity Based Costing System would help find the real relationship between the products produced and overhead.

In Chapter 1 of Eliyahu Goldratt’s book The Goal, we are introduced to Alex Rogo a mere plant manager, whom going into work that early morning is already faced with issues. While the reading continues we are introduced to a group of frustrated characters including, Dempsey, Ray, Martinez, and an hourly worker Tony. Bill Peach the vice president of this plant has decided to come in early causing a ruckus in the plant. Peach is frustrated because customer order 41427 is late and decided to take matters into his own hands, by threatening Tony's job in which he has no power of doing so. Rogo now has to face the problem and handle it himself. As the chapter continues we see many different types of writing in the workplace mentioned and how it is utilized. Chapter 1 of The Goal shows us how purchase orders, grievance forms, and efficiencies are relevant in the workplace.

When reaching out to Jonah, Rogo is to some extent perplexed of why the plant is not performing as expected, he is instructed to define the true goal of the firm. After contemplation, Rogo managed, with help of one of his accountants, to expand the ultimate goal “to make money” into essentially three categories: “to increase net profit, while simultaneously increasing return of investment, while simultaneously increasing cash flow”. The measures, as outlined by Jonah, of this overarching goal were; Throughput, Inventory and Operational Expense. Throughput refers to the rate at which the system generates cash from sales, Inventory is defined as the total money invested in purchasing things intended to sell, whereas Operational Expense is the cost associated with turning inventory into throughput. These measurements as defined in the Goal differ in

The purpose of the author writing The Goal was to recall his experience of having the task of fixing his plant, he is a plant manager at a manufacturing company. The author presents the reader with an idea of the problem that the plant is incurring and he uses fundamentals of business to see if he can find a solution to these problems before he and the rest of his plant finds himself unemployed. While doing this, he finds the flaws within the plant and how the mindset of keeping things even isn't what makes a manufacturing company thrive like other companies due to things like inventory cost and cost goods sold that not all business structures are influenced by, by setting forth different methods of production he wants to fix the

The cost-efficiency implies that the company introduces changes that allow the company saving costs without harmful effects of such changes on the quality of products and services of the company. For instance, the company can optimize internal business processes through their automation (Clarke, 2000). The automation of internal business processes saves time of employees which they can use more effectively, for instance, to increase their productivity. In such a way, the company enhances its performance and increases its revenues while its costs drop.

In the novel, Jonah doesn’t quite get answer every single question Alex has but Jonah leads Alex to understand answers to his questions by making him figure it out with critical thinking. According to Alex, the goal of the production plant is mainly productivity. Jonah’s questions makes Alex really think about the actual goal of the production plant by trying to understand the question given by Jonah. This is where Alex realizes the actual goal for the plant is to make money by increasing net profits. This must be done at the same time, or simultaneously by increasing a return on investment and also simultaneously increasing the cash flows. Alex faces many problems that actually benefit him by determining solutions to the next problem when Jonah utilizes him to think critically. This is where Jonah teaches Alex the advantages and answers to his dilemma by teaching Alex inventory, throughput, and operational expenses. Throughput is used in a production process where it measures the amount of materials that goes through the process. In business throughput is related to how investments can make returns, sales create revenue, and spending can create

The Goal: A Process of Ongoing Improvement, by Eliyahu M. Goldratt and Jeff Cox was written in 1992. It was an attempt to bring highly technical theories around ongoing process improvement to the reader in a non-technical way. The Book is filled with many “aha” moments that lead to a heightened awareness and provide a comprehensive framework for real goal attainment.

With this system each customer’s order cost the same amount to complete causing orders with high profit limits to subsidized orders with low profit limits making it difficult for Super Bakery to know the true cost for an order. The company changed to the activity-based costing (ABC) system allowing the managers the ability to recognize the cost and profit margins for each sale. The ABC system associates the costs with the activities allowing managers the opportunity to access a system that allocates overhead costs that uses multiple bases. Costs can be traced back to each individual’s account regardless of the product provider letting managers know which products are profitable and which ones are not. The traditional costing system allocates cost to departments or jobs instead of overhead cost pools. The traditional costing system makes it difficult to know which activity or product is making a profit.

Simplicity is achieved and true knowledge of business practices are obtained through the rigors of understanding terms and concepts such as: production levels, cost maximization, fixed and variable costs, opportunity costs, revenue and total costs curves, etc. These terms not only provide a basis for business operation, they also provide a competitive edge for the determined entrepreneur who seeks to understand the anatomy of business and its language. In hindsight, week two discussed many of the terms above and allowed team

The book tells us the story of a plant manager, Alex Rogo, who is trying to save his plant, at least show some improvements within 90 days to keep it open. Alex 's primary problem is that his plant can not consistently get a quality product out of the plant on time at the cost that can beat the competition. His plant is losing money and if he cannot make it profitable, the management eventually will decide to close the plant. In his fight to save his plant, a physician, Jonah, helps him in achieving his objectives.

I have achieved what I wanted in the project and created a website along with a video. My goal statement was to give information on the different events that happened during the Arsenal Invincibles season. I have helped my viewer to understand the key moments that made Arsenal’s 2003/2004 season, a season to remember.

During the meeting in the airport lounge where Alex Rogo came across Jonah. Starts off with Alex beginning to explain his reasons for traveling and his new job as a Plant Manager for UniCo. During their conversations Alex starts to describe how he has increased productivity by the addition of robots at about 36 percent. After some examination Jonah makes Alex doubt these numbers and figures and Alex later states that the robots have increased efficiency within the production line. From this brief exchange Alex began to really think twice about his production number and efficiency. By doing this Alex and his team now know that you can’t just rely on the increase in efficiency in one particular area in the plant. Then later on Alex sits down with Lou where the two begin do

In the goal, throughput is defined as the speed in which the manufacturing process produces money through sales. This compares with the traditional definition of throughput as the time it takes for a product to enter the manufacturing process and leave as a finished good. I find Goldratt’s definition to be a more efficient measure of productivity. With the traditional definition of throughput it is merely measuring the time it takes for a product to be produced from start to finish. However, this does not take into account whether or not the finished products are being sold or sitting on a shelf. This is why Goldratt’s definition of throughput is more efficient measure because if the product is not being sold it is not being accounted for.

In the complex world of business, obtaining success can often seem quite difficult. Problems arise, opinions differ, personalities clash, and often time’s solutions seem near impossible. The important idea to recognize in these situations, however, is that all businesses can be simplified to one main fundamental goal, making money. When thinking about making money, there are three important terms that must be understood. These terms are throughput, inventory, and operational expense. In the accounting world, throughput is revenue earned from selling a product or service, inventory is money spent on fixed assets which lead to throughput, and operating expenses are money spent to turn inventory into throughput. Each of these terms plays a

There are many different aspects that go into making a business successful. Businesses need a strong vision, great leaders within the organization, strong sales, a successful sales team, a steady stream of revenue as well as a way to produce the revenue or sales coming in. Two important aspects of business that are not always brought up, is profit and the cost to operate the organization. Often times managers only look at the net profit or net revenue on their Profit and Loss statements without breaking down the numbers or cost of doing business. Even if an organization is successful and has a great profit margin at the end of the month, quarter or year, does not mean they do not need to analyze the cost of the operations. Analyzing those costs cannot only help an organization become profitable, when they are unprofitable, but can make them more profitable even if they show a healthy profit. Finding ways to cut cost or become more efficient with the operations can lead an organization in the right direction when it comes to their finances (Ahmed, S., 2016).