Goal Paper 16 to 30

Elevate the constraint by investing in additional resources which would be necessary if this step involves a true “bottleneck.”

However, before they realized they needed to restrict the flow of material into the plant by having the bottlenecks control the flow, so many red tags flooded the upstream workstations that the other parts, with green tags, sat in some cases for weeks before a gap in red tags allowed them to be produced. Yellow tags were placed on parts that had gone through the bottleneck, to make sure the capacity would not be wasted by preventable errors downstream from the bottlenecks.

What is Nick Gibbons’s vision in this case study? How is it similar to or different from the vision of the owners of the paper? Discuss the unique challenges a leader faces when required to implement a vision of his or her superiors.

It is stressed in the Goal that there is a massive difference between throughput and efficiency. The novel makes the case that having an efficient operation does not equate to profitability. What does equate to profitability is to increase the throughput of any given operations system. Jonah tells Alex, “Throughput, is the rate in which the system generates money through sales.” (Goldratt, E.M. (2014), The Goal, pg. 60). Jonah goes on to explain to Alex that inventory is all the money that was invested in purchasing things that the system intends to sell. (Id). Furthermore, operational expenses are those costs that are required to turn inventory into throughput. (Id, at pg. 61). The definitions of these three measurements are not standard definitions for an MBA student. It is an interesting perspective on how to view operations.

2. Evaluate Gordon Biersch's organizational alternatives to realize its growth ambitions. Recommend a course to follow?

Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.

The first way throughput can be increased is by making sure that the bottleneck’s time is not wasted. According to the text, this means that a bottleneck should never be sitting idle or working on defective parts. When a bottleneck is down for an hour, it is not only the cost of the bottleneck that is lost, but the cost of the entire system. This is because the bottleneck’s capacity is equal to the entire system’s capacity, and whatever a bottleneck produces in one hour is what the corporation produces in one hour. In addition, if a bottleneck works on defective parts or parts that are not needed, it is a waste of time that the bottleneck could be spending on good parts that are needed. Without good parts from a bottleneck, you can’t sell a product or generate throughput.

3. How does demand variability impact capacity issues at LAA? What can the company do to control variability in demand?

Say we have identified the bottleneck machine of a production process. List at least four things suggested in the book that will result in a greater throughput without actually expanding the physical capacity of the machine.

Jonah tells them that they have hidden capacity because some of their thinking is incorrect. Some ways to increase capacity at the bottlenecks are not to have any down time within the bottlenecks, make sure they are only working on quality products so not to waste time, and relieve the workload by farming some work out to vendors. Jonah wants to know how much it cost when the bottlenecks (X and heat treat) machines are down. Lou says $32 per hour for the X machine and $21 per hour for heat treat. How much when the whole

After running a process flow [see Exhibit 2], it becomes apparent that a main bottleneck exists at the

Hence, the bottleneck is due to high variability in order arrival rate and order processing time. Hence, we need to analyse the quarterly utilization level.

There are constraints on capacity management and these are normally Time and Capacity. Time may be a constraint where a customer has a particular required delivery date. In this situation, capacity managers often "plan backwards". In other words, they allocate the final stage (operation) of the production tasks to the period where delivery is required; the penultimate task one period earlier and so on. This process helps identify whether there is sufficient time to meet the production demands and whether capacity needs to be increased, albeit temporarily.

It is a common desire to have a balanced plant, but this cannot be reached if there are problems with the levels of capacity in the plant. If there is not enough capacity in the plant, it almost seems as if the possibility of having throughput is being lost and if there is an excessive amount of capacity there is money that is being wasted, which would be a problem when trying to reduce the operating expenses. However, in reality the closer that a plant comes to being balanced, the closer they get to losing money. “ Look at this obsession with trimming capacity in terms of the goal,

There is lateness and error in the points of view and reactions that flawlessly maintain maximum throughput potential without exceeding current capabilities and feasible abilities. For example, as no human is perfect it can be very easy to wrongly perceive information, data, points of view or instructions, these errors in turn can push the system over the limit. For example responding to lack of water would be to install pipes to provide an availability of it. Pushing the system over the limit” means to use resources without having any guarantee that they will be used efficiently. For example ordering lots of paper in bulk may seem as if it is a more affordable option for an organisation rather than buying it in smaller quantities every now and then when supplies run low – there is no guarantee that they will use as much paper in the future. However there are also times when going over a limit does not cause issues such as if a charger or an electrical appliance is left on that is powered by solar panels. The reason being that no fossil fuels have been wasted. The batteries of the solar panels may be lower than they would have been but overall there is minimal loss.