The Goal: A Process of ongoing Improvement

Jennifer Purifoy

April 30, 2001

Page 1 of 3

Executive Summary for

The Goal: A Process of Ongoing Improvement

by Eliyahu M. Goldratt

The heart of this story is based around the life of Alex Rogo, Plant Manager for

Uniware a division of Unico. After a very upset customer approaches Alex’s boss,

Bill Peach, he is given an ultimatum to turn the plant around in three months. Due

to the limited amount of time available, there are not many outside tools available

such as consultants, surveys, etc. With very few hopes, Alex foresees the

inevitable until he remembers his conversation with Jonah, a physicist Alex knew

from a previous job.

The Goal:

It is not until Alex’s job is in jeopardy that he decides to devour into his

conversation with 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?" After rethinking his

conversation, Alex realizes that the goal of any business is to make money.

Furthermore, if the goal is to make money any action toward this goal is consider

productive and any action not moving towards the goal is nonproductive. Alex

unsure of such a simple answer decides to contact Jonah to continue the search

for more answers.

Measurements:

Once Alex contacts Jonah they define the following measurements to define the

success of any plant’s production:

1. Throughout = 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.

2. Inventory = all the money invested in purchasing items that will be sold.

This could include the remains of their machines after being used toward

the investment.

3. Operational expense = all the money used to turn inventory into

throughput.

This would include such items as depreciation of a machine, lubricating

oil, scraps, etc.

Balancing a Production Line:

Jonah explains to Alex that a plant that is continuously productive in