Sunday, September 10, 2006

Concepts from "The Goal"

Throughput: It is the rate at which the system generates money through sales.

Inventory: It is all the money the system has invested in purchasing things it intends to sell.

Operational Expense: It is all the money the system spends in order to turn inventory into throughput.

Bottleneck: It is any resource whose capacity is equal to or less than the demand placed upon it.

Non-Bottleneck: It is any resource whose capacity is greater than demand placed upon it.

"Balance Flow not Capacity."

Flow through Bottleneck = Market Demand

Bottleneck will determine throughput. E.g. Herbie the fat kid on the hike.

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