The beginning of the book starts off with Alex Rogo's plant having major problems and his boss gets on his case about it. His boss, Peach, tells him he has three months to fix these problems or they would be shut down. Rogo has to find a way to improve efficiency in his plant and he is at a loss of how to do that. He thinks that because the plant has new robots that this automatically improves efficiency, right?
Peach calls a special meeting at the headquarters for all the plant managers. Rogo does not know what the meeting is about ahead of time, but assumes it will be bad news about how the division's performance is horrible this first quarter. Rogo see Nathan Selwin in the parking garage; he informs Rogo that if performance isn't
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It becomes difficult during stressful times at work because then it will most likely effect the family time and life at home. It is important that workers learn to manage time enough to see their family. Stress at work causes neglection of family. This then causes more tension at home to add to the already stressed out worker - one more thing to deal with. Alex definitely needs to learn how to treat his wife and kids better. He should refrain from making committments (i.e. coming home from dinner or a date with his wife) if he is that stressed out at work and will not follow through with them.
There are certain measurements that can be used to know if the plant is helping the company. The following are three measurements that express the goal of making money, but permit you to develop operational rules for running a plant:
1. Throughput: the rate at which the system generates money through sales.
2. Inventory: all the money that the system has invested in purchasing things it intends to sell.
3. Operational expense: all the money the system spends in order to turn inventory into throughput.
Everything in the plant is covered by these three measurements. A company must increase throughput while simultaneously reducing both inventory and operational expenses.
All three of the definitions that Jonah gave Alex contain the word money. Alex described it as one for incoming money, money still stuck
Due to problems companywide Mr. Peach decides to plan a meeting for all plant managers. On the way to the meeting Alex finds out from another plant manager that Mr. Peach has a year to improve production or the division will go up for sale. This explains Peach’s unpredictable behavior lately. During the meeting while learning the expected goals for next quarter Alex gets side tracked and remembers a recent business trip. While on the trip he ran in to his physics professor (Jonah) at the airport. Jonah has become familiar with plant operations and catches Alex off guard with the knowledge he has of his plant however, he does not know where he works. Jonah correctly identifies that Alex’s plant has a high inventory and is late on most orders. Jonah then asks what the primary goal is at his company, Alex is confused
As understandable as it may be, his work schedule, there needs to be a balance between work schedule and family time, quality time. This directly ties to the second question of constructive family socialization. To me it is not enough to take the family out to eat when the time allows it and not have this type of socialization. Nowhere in the study was this mentioned. It seems as if both John and Julia try to distract from the work routine and spend some time with their children, which are a good thing, but there is no constructiveness in addressing possible changes that could benefit the family better itself. For example, John being the one out of the home the most can be discussing a possible job change or decreasing the amount of time he is out to be there more for his children and wife. This is what betters a family in my opinion even though it is difficult habit to adapt to it is totally worth trying.
expenses are spent on salaries of employers who are hired to monitor certain aspects of the company. This can include monitoring the inventory of the business or the distribution of products and services. It is important for companies to monitor the OMM costs of their business in order to make predictions about future profits and losses.
330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.
Next there is total cost and total revenue. Total cost is what the company spends to produce a certain quantity of its product. This includes the cost of all the materials,
3. Using the variable costing method, which of the following costs are assigned to inventory?
The FASB Codification provides guidance on how to classify monetary and nonmonetary assets and liabilities. For typical circumstances it suggests using a classification table, and for non-typical circumstances Codification guides to refer to the definitions. To begin with, let us appeal to the definition of “inventory”. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the
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
Operating expenses includes production costs, such as direct labor, indirect labor, inventory carrying costs, equipment depreciation, materials and supplies used in production, and administrative cost. This was not happening at Alex’s plant. His inventories had increased over the past six or seven months and operational expense also increased. This meant he had a lot of work to do to keep his plant open and he was now aware of it.
The book is about a plant manger in a manufacturing company, Alex, who was hired in this position six months ago. His plant was suffered because it was running with neither profitability nor productivity. His boss, Mr. Peach, told Alex that the plant will be shut down in three months unless shows some improvements. Alex then, meets with
I read the fictional book called, The goal: A process of ongoing improvement by Eliyahu M. Goldratt and Jeff cox. Goldratt has an extensive history of writing novels about business problems and their solutions. His list of work includes; The race, The haystack syndrome, What is This Thing Called Theory of Constraints and How Should it be Implemented?, It’s not luck, critical chain, and necessary but not sufficient. With his most recent work being in 2009 called Isn’t it obvious focusing on retail. The authors purpose for writing this book would be to educate and show examples on how to think outside the box or solve solutions, possibly even save companies. In his own words, “This book is an attempt to show that we can postulate a very small number of assumptions and utilize them to explain a very large spectrum of industrial phenomena” (Goldratt, Intro to revised edition page 2). He states he wants to show that these methods aren’t fantasy and have been/are working in pants around the world, and says that, “Finally, and most importantly, I wanted to show that we can all be outstanding scientists. The secret of being a good scientist, I believe, lies not in our brain power. We have enough. We simply need to look at reality and think logically and precisely about what we see” (Goldratt, Introduction page 2). This story is about a failing or close to failing manufacturing plant in a place called Bearington. The novel begins with the main character Alex Rogo, a
Alex meets Jonah, his favorite professor in school, surprisingly at an airport, during his rather traumatic phase of professional and family life. Jonah opens his eyes to a new world of constraints and variability. He tells Alex that he is actually heading a plant not with inefficient people but with an inefficient system. Jonah gets to know all this by just asking a few simple questions about Alex’s professional life
goods. They can also be in process between different locations. Holding of inventories can cost a
reduction in inventories of finished goods. In other words, if operating plans call for a buildup or