Throughput Is A Efficient Measure Of Productivity

911 WordsMar 9, 20164 Pages
In the goal, throughput is defined as the speed in which the manufacturing process produces money through sales. This compares with the traditional definition of throughput as the time it takes for a product to enter the manufacturing process and leave as a finished good. I find Goldratt’s definition to be a more efficient measure of productivity. With the traditional definition of throughput it is merely measuring the time it takes for a product to be produced from start to finish. However, this does not take into account whether or not the finished products are being sold or sitting on a shelf. This is why Goldratt’s definition of throughput is more efficient measure because if the product is not being sold it is not being accounted for. The second term defined is inventory, which is the amount of money the manufacturing plant has spent on things they anticipate to sell. Traditionally inventory is defined as a list of materials or parts in stock on hand for use. The Goal’s definition is more accurate because it takes into account other costs of the inventory not just the material itself. There are raw materials, work in process inventory, and finished goods inventory. In the Goal they accounted for the holding costs to store finished products not yet sold as inventory. The third term defined is operational expense, is defined as the total money spent to convert inventory to throughput. This definition separates expenses that do not contribute to converting inventory
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