Premium Essay

Goal by Eliyahu

In: Business and Management

Submitted By trufflelove
Words 1312
Pages 6
Introduction

The book “The Goal” by Eliyahu M. Goldratt tells a story about how a plant manager of UniCo succeeded in redirecting the company to become profitable again by implementing the theory of constraints. It is written as a novel to help teach people on how imply the theory of constraints to the real life situation.
The Goal Summary
Alex Rogo is the main character in the novel and he is the plant manager of UniCo. He was given a three-months period by the vice-president of the company to get the company back on track or they have to shut it down. Under a lot of pressures, both from his personal life with his wife and the company that he works for, Alex Rogo seek advice from his old college physics teacher named Jonah. Having told the problems to Jonah, the physics teacher then crafted three measurements for Alex to help him solve the problems. And that is by measuring the throughput, operational expenses, and inventory. To increase throughput, while simultaneously reducing operational expenses and inventory could help him increase the net profit, as it was Alex’s goal at that time. Alex was asked by his teacher to look for those three measurements in his plant. However, Alex still could not find the answers to those three measurements.
On one Saturday morning, he remembered that he needed to take his boy to an overnight hike for Boy Scout event. He needed to lead the group because the troop leader was sick. During the hike, he realizes the line closing and spreading and suddenly remembered what Jonah taught about him about statistical fluctuations and the dependent events that each scout began them. He also experimented with the boy scouts during the hike by creating a game. By assigning the slowest kid in the camp as the leader, he was able to maintain the speed of the group and the fluctuation. He then started to understand what Jonah has taught him...

Similar Documents

Premium Essay

The Goal by Eliyahu M. Goldratt

...1. “The Goal” defines throughput as “the rate at which the system generates money through sales”. Our textbook defines it as “the total elapsed time from the start to the finish of a job or a customer being processed at one or more workcenters”. Inventory is defined by “The Goal” as “all the money that the system has invested in purchasing things which it intends to sell”. The textbook defines it as “a stock of materials used to satisfy customer demand or to support the production of services or goods”. “The Goal” defines operational expense as “all the money they systems spends in order to turn inventory into throughput”. The textbook definition (found in table 7.1 on page 245) has a very similar explanation. According to Investopedia, it is defined as “a category expenditure that a business incurs as a result of performing its normal business operations”. Overall, I find Goldratt’s definitions to be more helpful. They provide a more “common sense” and general approach to operations. I especially like the inventory definition. It essentially encompasses anything that could be sold as inventory; any item that could be turned into cash. 2. “The Goal” describes a bottleneck as “any resource whose capacity is equal to or less than the demand placed on it. I see an example of this every day in the deli where I get lunch. There are two cashiers taking orders from two separate lines. Once they take an order, they give the customer a receipt with an order number,......

Words: 1813 - Pages: 8

Premium Essay

Summary of Lessons Learned from the Goal by Eliyahu M. Goldratt

...Chapter 1 * Do not threaten your employees that they’ll get fired. Be diplomatic. * Don’t let your boss boss you around so much. Do not be a doormat. * Don’t take his actions personally. He is just doing his job. * Take your boss’s nagging and annoying behavior as a challenge. * Don’t ask for resources unless you are sure that you are using your current resources efficiently. * Sometimes, the problems that arise are only symptoms of bigger problems. Chapter 2 * Keep your promises to your spouse or remember making them, or don’t make them at all. * Problems at work can greatly affect personal life at home. * If you’re unsure about something, don’t make a promise about it. * Try to understand your wife. * The time a machine is down is also considered a cost. * Stop being in denial. Acceptance that there is a problem is the first step. * Self-assessment (thinking alone deeply) is a good activity to do once in a while. * Problems in the company do not necessarily arise from the lack of technology, workers, etc. Sometimes the problems are caused by how the company/plant is being managed. * Competition is a very strong factor on how well a business makes. Chapter 3 * Take the time to stop and enjoy your surroundings. * Starting early doesn’t necessarily mean your costs will be less. * Sometimes your boss is treating you like shit because his boss is treating him like shit. Try to understand. * Try to pay...

Words: 2669 - Pages: 11

Premium Essay

Eliyahu Goldratt’s Business Model

...According to the Goal: How Eliyahu Goldratt Helps Organizations Examine Their Processes to Achieve Maximum Results Author: Christian Winter Faculty Mentor: Vijay Vaidyanathan, Department of Engineering Technology, College of Engineering Department: Department of Engineering Technology, College of Engineering, & Honors College According to the Goal 2 Bio: Christian Winter was born in Frankfurt–Oder, Germany, and moved to the United States in 2002. He is currently pursuing a Bachelor of Science degree in Electronics Engineering Technology at the University of North Texas in Denton. Winter is a member of the Institute of Electrical and Electronics Engineers (IEEE) student branch at UNT, currently serving as the chairperson. He is also a member of the UNT Honors College, Tau Alpha Pi, Phi Kappa Phi, and the Golden Key International Honor Society. He was chosen for Who’s Who Among Students at American Colleges and Universities in 2004–2005. Winter received the Outstanding Electronics Engineering Student Award for the 2004–2005 academic year. On graduation, Winter plans to pursue a Master of Science in Electrical Engineering at the University of Texas at Dallas. He currently works as an engineering intern at Sanmina-SCI in Allen, Texas. According to the Goal 3 Abstract: Eliyahu Goldratt’s Theory of Constraints has helped companies around the world improve their profit margins by effectively managing business processes. Goldratt first introduced his theory in 1984......

Words: 3612 - Pages: 15

Premium Essay

Operations

...According to the Goal: How Eliyahu Goldratt Helps Organizations Examine Their Processes to Achieve Maximum Results Author: Christian Winter Faculty Mentor: Vijay Vaidyanathan, Department of Engineering Technology, College of Engineering Department: Department of Engineering Technology, College of Engineering, & Honors College According to the Goal 2 Bio: Christian Winter was born in Frankfurt–Oder, Germany, and moved to the United States in 2002. He is currently pursuing a Bachelor of Science degree in Electronics Engineering Technology at the University of North Texas in Denton. Winter is a member of the Institute of Electrical and Electronics Engineers (IEEE) student branch at UNT, currently serving as the chairperson. He is also a member of the UNT Honors College, Tau Alpha Pi, Phi Kappa Phi, and the Golden Key International Honor Society. He was chosen for Who’s Who Among Students at American Colleges and Universities in 2004–2005. Winter received the Outstanding Electronics Engineering Student Award for the 2004–2005 academic year. On graduation, Winter plans to pursue a Master of Science in Electrical Engineering at the University of Texas at Dallas. He currently works as an engineering intern at Sanmina-SCI in Allen, Texas. According to the Goal 3 Abstract: Eliyahu Goldratt’s Theory of Constraints has helped companies around the world improve their profit margins by effectively managing business processes. Goldratt first introduced his theory in 1984......

Words: 3612 - Pages: 15

Premium Essay

Theory of Constraints

...startling tangible results to companies worldwide. An independent study of Theory of Constraints implementations around the world found that huge results were consistently achieved: Lead Times Reduced 69% Cycle Times Reduced 66% Due Date Performance Improved 60% Inventory Levels Reduced 50% Revenue / Throughput Increased 68% This is a system improvement tool, which states that every system has one goal and it is achieved by many linked processes and out of those processes, one process acts like a bottleneck. So, this theory is utilized in order to remove that bottleneck and ultimately achieve higher productivity. Commonly these bottle necks can be easily understood by the example of assembling operation. There are 5 stations; each station has different times for assembling e.g 40 minutes, 50 and 60 minutes. Out of these stations, station with maximum operation time will be considered as bottleneck station, because at this station, a queue will be generated and ultimately it will affect productivity of system.  Concept of Theory of Constraint was given by Eliyahu Moshe Goldratt. Basically he was a physicist and work on production system design.  There are many benefits of TOC application, like * Enhanced ability to update system and processes and ultimately winning more profit...

Words: 1247 - Pages: 5

Premium Essay

Reading Assignment

...The goal focuses on the theory of constraints and its practical implementation. This is done through a five step process of (1) identifying the plant or organizations constraint, (2) deciding how to exploit the system’s constraint, and (3) subordinating everything else to the above decision. You must elevate the system’s constraint. If and when the previous constraint has been broken, return to the first step. Through this process Mr. Rogo was able to save his plant from shutting down. Alex Rogo, a plant manager at Unico, is struggling with production issues and trying to keep his plant afloat. He is caught in a situation where his plant is losing money and he only has three months to get it back on track or the plant will be shut down. Alex runs into his old friend Jonah. He and Jonah engage in a series of concersations that prompt Alex to do a lot of critical thinking and evaluation. The theory of constraint comes to play again and is applied as Alex must answer the following: What to change, to what degree, and how to cause the change. Jonah then gives Alex three measurements with specific definitions that will lead him to “the goal.” These measurements are: increase throughput, reduce inventory, and reduce operating expenses. Alex must figure out for himself how to define the measurements in his plant. According to the goal, Alex and his colleagues must figure out what they are doing wrong according to “the goal.” Alex and his team are faced with an order that......

Words: 571 - Pages: 3

Premium Essay

Toc Methodology

...1 WHAT IS “THEORY OF CONSTRAINTS” ? TOC PHILOSOPHY ? The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing process to identify the constraint and restructure the rest of the organization around it. TOC adopts the common idiom "a chain is no stronger than its weakest link." This means that processes, organizations, etc., are vulnerable because the weakest person or part can always damage or break them or at least adversely affect the outcome. History The theory of constraints (TOC) is an overall management philosophy introduced by Eliyahu M. Goldratt in his 1984 book titled “The Goal”, that is geared to help organizations continually achieve their goals. Goldratt adapted the concept to project management with his book Critical Chain, published 1997. An earlier propagator of the concept was Wolfgang Mewes in Germany with publications on power-oriented management theory (Machtorientierte Führungstheorie, 1963) and following with his Energo-Kybernetic System (EKS, 1971), later renamed Engpasskonzentrierte Strategie as a more advanced theory of bottlenecks. The publications of Wolfgang Mewes are marketed through the FAZ Verlag, publishing house of the German newspaper Frankfurter Allgemeine Zeitung. However, the paradigm Theory of constraints was first used by Goldratt. Key......

Words: 533 - Pages: 3

Premium Essay

The Goal

...edu/~jensen/ORMM/instruction/powerpoint/goal/goal1.ppt. Google automatically generates html versions of documents as we crawl the web. 8/27/04 Paul A. Jensen Operations Research Models and Methods Copyright 2004 - All rights reserved The Goal The Goal by Eliyahu M. Goldratt and Jeff Cox, North River Press, Inc., Second Revised Edition (1992). 2 Set the Stage * Alex Rogo, plant manager of the Bearington plant * Bearington plant, part of the UniWare Division, part of the conglomerate UniCo * Alex meets Jonah, his college physics professor, at the airport 3 Interchange between Alex and Jonah at Airport 4 Airport conversation continues 5 Alex and Jonah: a conflict * Alex: I am running an efficient plant. * Jonah: You are running an inefficient plant. * Data o Machines run 90% of the time. o Unit costs are low. o More products are not shipped. o No one is fired. o Inventory is not decreased. o Inventories are high. o Can't ship on time. 6 What is the source of the conflict? * Productivity: Anything that moves toward the goal is productive. Anything that moves away from the goal is not productive. * Alex and Jonah have different definitions of the goal. * What is the goal? 7 Question left by Jonah: What is the Goal? * Make product *......

Words: 561 - Pages: 3

Premium Essay

Bottle Necks

...week one a flow chart was designed to measure and improve the process of International sales orders. The goal of the process flowchart was to create ways to make the order entry process less time consuming and more efficient. Action items were put in place to create a better process. An evaluation of the main bottleneck in the international order entry process will be reviewed. A definition and application of Goldratt’s theory of constraints to identify and overcome process bottlenecks will be included as well. The Process The main bottleneck in the international process is the fact that entering orders is such a manual process. There are twelve steps involved to enter one purchase order: 1. Receive orders by email 2. Flag orders according to importance 3. Print emails 4. Move orders to the individual countries folders in Microsoft Outlook 5. Correlate the orders 6. Staple the orders 7. Separate the orders by country for order entry 8. Pull up electronic copy of the international address book 9. Order Entry 10. Sent order acknowledgement to sales office to confirm accuracy before placing order in the production schedule. 11. Once order is confirmed by the international sales team member, order will be placed in the production schedule. 12. Place order in the outgoing basket so that the admin can scan orders in doc-view on customer service behalf. The goal of the process flowchart is to create ways to make the order entry process less time consuming and more......

Words: 606 - Pages: 3

Premium Essay

The Goal

...Mesina, Sheenna Marie I. December 16, 2013 11126760 OPERMAN K39 Insights on The Goal by Eliyahu Goldratt The heart of the story is based on the life of Alex Rogo, who manages a production plant owned by UniCo Manufacturing. He is on the verge of losing his job for having an unproductive plant where everything is a mess. They are always behind schedule and things are looking terrible. He has a large backlog of customer orders, long lead times and significant amounts of work-in-process inventory. But with the help of his old friend Jonah, who is a former physics teacher turned process consultant, he found a hope in turning the plant around. The Goal The conversation of Jonah and Alex is made through The Socratic Method wherein Jonah poses several questions to analyze his plant’s situation until they come up with a solution to their problem. On the question “What is the goal of any business?” Alex realizes that the goal of his plant and the overall company is simple: to make money. Furthermore, if the goal is to make money any activity toward this goal is considered productive and any action away from it is non-productive. In addition to that, every activity that occurs in the plant must be measured by one metric only. The Goal describes the concept of “theory of constraints,” which focuses on identifying bottleneck operations in a production process, increasing throughput and identifying statistical fluctuations and dependent events which can......

Words: 723 - Pages: 3

Premium Essay

The Goal

...QM 319 I spent two weeks time to read The Goal by Eliyahu M. Tolerat. This is a interesting book because it explains the theory of constrain by tells a simple story. Since use the way of novel, the artical don’t have more theoretical and very easy to understand. I love to read novel because of offbeat plot which will attract me to read on. At the beginning, Rogo who is the director of a factory met a new problem that the factory and its administrations have run into a serious business crisis. Rogo’s factory produced goods every day in hurry and delivered every day in hurry. However, they delayed every batch of goods. Then his business department minister made a request to him that he just have three months to rescue this factory and make profit or he would be fired and the factory would close. Faced the factory, Rogo has already worked 15 years, would be stopped, Rogo tries to think of a way to save the factory. A chance, he misses his university physics professor Jonah. The professor Jonah tells him, he must have a goal. As a peason, maybe Rogo has a lots goals, but be a director, he just has a certain goal, is profit. Under Jonah’s help, overcomes difficulties, finally rescues his factory. Like improve production efficiency, reduce production time and reduce production cost. Rogo is not negative like other people thought, escape from reality but also trying to find his goal, a goal to save his factory. He not only learned TOC in the company but also learned in the life...

Words: 1781 - Pages: 8

Premium Essay

Sub Optimization

...be optimum for the organization as a whole. This type of policy can actually do more harm than good. When one department is delivering faster than another department can handle this could cause what is known as a “bottleneck” in the process, which may result in lost profits and customers. “This is a typical effect of sub-optimization. If you only optimize one step in your value creation process it can deliver things faster than the rest of the organization can deal with. Either that part runs dry on input or the output of that part floods subsequent process steps. Make sure that no one department produces more than the department with the least capacity (the bottleneck) can handle” (Marschall, 2011). In the management book “The Goal, Eliyahu Goldratt gives the example of a decision to make machining centers in a factory more efficient by increasing the amount of metal taken off with each pass of the cutting tool. However, Increasing the amount of metal taken off on each pass made the parts brittle, which necessitated heat-treating. The increased load on the furnace gave rise to a serious bottleneck in heat-treating and made the plant significantly less productive and less profitable. In an effort to prevent sub optimization from occurring each department must work together to understand what the best process is as a whole and to see the bigger picture. Management must ensure that processes are not implemented independently of...

Words: 400 - Pages: 2

Premium Essay

Historical Project

...HISTORICAL PROJECT 2570 bc The Great pyramid of giza completed The Pharaohs built the pyramids and today archaeologists still argue about how they achieved this feat. Ancient records show there were managers for each of the four faces of the Great Pyramid, responsible for overseeing their completion. We know there was some degree of planning, execution and control involved in managing this project. 208 BC Construction of the Great Wall of China Later still, another of the Seven Wonders of the World was built. Since the Qin Dynasty (221BC-206BC), construction of the Great Wall had been a large project. According to historical data, the labor force was organized into three groups: soldiers, common people and criminals. The Emperor Qin Shihuang ordered millions of people to finish this project. 1917 The Gantt chart Developed by Henry Gantt (1861-1919) One of the forefathers of project management, Henry Gantt is best-known for creating his self-named scheduling diagram, the Gantt chart. It was a radical idea and an innovation of worldwide importance in the 1920s. One of its first uses was on the Hoover Dam project started in 1931. Gantt charts are still in use today and form an important part of the project managers' toolkit. 1956 The American Association of Cost Engineers (now AACE International) Formed Early practitioners of project management and the associated specialties of planning and scheduling, cost estimating, cost and schedule control formed the......

Words: 1925 - Pages: 8

Premium Essay

The Goal

...The authors, Eliyahu M. Goldratt and Jeff Cox, wrote a management oriented novel, “The Goal,” which focuses on constraint management and strategic capacity planning. This novel was closely related to the BADM 375 class materials and helped me understand various concepts and theories with real world examples in the novel. The novel provides several key takeaways through Mr. Alex Rogo, a manager of a failing manufacturing facility. Mr. Bill Peach, the division vice-president, assigns Rogo to revive the failing plant in three months. Rogo has to improve plant’s ability to consistently ship out quality goods out the door on time with the optimal cost. In the plant, while finished and WIP inventories are soaring, the plant struggles with months of production backlog and constant late shipments. Due to many bottlenecks in the plant, Rogo initially faces various problems to make profits. Bottleneck, as we learned in class, means a “point of congestion” in a system, and the plant had several “resources whose capacities were equal to or less than the demand placed upon them (139).” With these constraints, Rogo had one goal in his mind and that was to turn things around for the plant and start making money. In the novel, Rogo encountered his physics professor, Jonah. In their meeting, Rogo discusses about the current situation of managing the plant. Rogo tells Jonah that his plant’s productivity seemed to increase due to decline in price per part and increase in efficiency. Jonah......

Words: 672 - Pages: 3

Premium Essay

Theory of Constraints

...Theory of Constraints Term Paper BUSN 6070, Summer 2014 In the day and time in which we live, “quality” has come to encompass much more than just product or process conformance. Quality is a requirement for today’s customer regardless of type of product or the price the consumer has paid. But, when producing a quality product there are some constraints. In management, especially quality management there is something called the Theory of Constraints. The Theory of Constraints is defined as: A management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing process to identify the constraint and restructure the rest of the organization around it. TOC adopts the common idiom "a chain is no stronger than its weakest link." This means that processes, organizations, etc., are vulnerable because the weakest person or part can always damage or break them or at least adversely affect the outcome. (Garrison, Managerial accounting 14th ed.) Have you ever heard the saying, “You can’t put ten pounds of sand in a five-pound bag?” How about, “I’m trying to juggle too many priorities at once.” If you’ve heard (or said) either of these things, you have some sense of the stress that constraints impose on everyone. In many cases, the challenge appears to be not enough time. But, the characteristics of time are......

Words: 720 - Pages: 3