The Goal Chapters 1-15

Using the robots as an example, explain: (1) How the standard cost system defines "efficiency", (2) How high efficiency could lead to local optimum.

1) Productivity of single machines or work stations - the more parts it produces, the more efficient it is. Producing as much as it can all the time. 2) If all resources are producing as much as they can all the time, end up with inventory at machines with less capacity. Local optimums are created from a lack of capacity. Should be focused on the capacity of the resources down the line.

Describe another real-life example to describe the phenomena of "dependent events" and "statistical fluctuations".

Another example - dependent events - taking a long flight with multiple layovers or stages. Statistical Fluctuations - delays in flights, longer time in the air, etc.

Using the analogy between the hiking and a manufacturing operation, explain the phenomena of "dependent events" and "statistical fluctuations". Explain what a "balanced plant" is and explain why it would not work.

Dependent events - an event, or series of events, must take place before another can begin. Statistical Fluctuations - fluctuations of time to complete a process. Hiking (Dependent events) - to get to Devil's Gulch, a trail has to be walked. In line, the person ahead has to walk before the person behind can. Hiking (Statistical Fluctuations) - Difference in speed of the walkers. DIfference in the speed at any given time. In the plant, it may take an average time to do each assembly but the actual time per instance will be different. Balanced plant - a plant where the capacity of each and every resource is balanced exactly with demand from the market. Demand is perfectly aligned with capacity and the time devoted to each stage is the same. Does not work because you have statistical fluctuations in dependent events

Using the dice game to explain the phenomena of "dependent events" and "statistical fluctuations". Explain why a "balanced plant" would not work.

Dice - Dependent Events - Each set of bowls are dependent events, the dice determine how many matches move from one to the next. Statistical Fluctuations - Every time the dice are rolled he gets a different outcome, between 1 and 6. Balanced plant - each bowl has the same capacity for matches.

What is the "Goal"? How is it related to the three performance measurements: NP, ROI, & CF? Why does Alex need another set of measurement: Throughput, Inventory, OE?

Goal: To make money. Do so by increasing net profit while simultaneously increasing ROI and simultaneously cash flow. Alex needs another set of measurements in order to express the goal to his plant staff

Explain the analogy between the hiking troop and a manufacturing operation in terms of Throughput, Inventory, OE, dependent events, statistical fluctuations, and balanced plant.

Hiking - Speed of everyone in the group getting through the trail. Inventory - the amount of trail between the first and the last. OE - The energy the boys need to walk. Dependent events - each person in line depends on the person in front of them. Statistical Fluctuations - Everyone fluctuates in speed - limit on how fast they can go but not how slow. Balanced plant - making sure everyone is walking exactly the same pace.

How is "productivity" defined traditionally? How does Jonah define "productivity"?

Productivity (traditional) - maximize efficiency of individual resources, local optimums are pursued. Productivity (Jonah) - an action that moves the plant toward making money (the goal) is productive, and an action that takes away from making money is non productive. Ideally - increase throughput, reduces inventory, reduces operating expenses. Global optimum - maximize end product we can produce.

What are the three questions that Jonah asked Alex about the productivity of the robots?

Question 1: Did you sell more products (increase throughput)? Question 2: Did you fire anybody (reduce the plant's operating expense)? Question 3: Did your inventories go down (reduce inventory)?

The hiking did not go very well first, why? What did Alex do to improve the pace of the hiking? Why did he ask Herbie to lead the hiking? Did it work?

There becomes a large gap in the distance between the troops, as some of the bigger boys are not able to keep up. The person behind can only go as fast as the person ahead of them, causing statistical fluctuations. Figures out that the one who is walking the slowest is governing throughput. To improve the pace, he has Herbie lead. If Herbie is in the front, the group will not get spread out as they will all be governed by his pace. To improve Herbie's capacity (bottleneck), they take things out of his backpack to lighten his load which enables him to walk faster

How does Jonah define "Throughput", "Inventory", and "Operating Expense"? How are these definitions different from traditional definitions?

Throughput - the rate at which the system generates money through sales. Has to be sold. Inventory - all the money that the system has invested in purchasing things which it intends to sell Operating Expense - all the money the system spends in order to turn inventory into throughput Traditionally: Throughput is the time it takes for an input to be turned into an output, operating expense - how much it costs to produce items, inventory - how much stuff we have sitting in our factory or store waiting to be sold

Do you feel that the Bearington plant has the right equipment and technology to do the job?

Yes

Do you perceive that the people at Bearington plant were like most manufacturing people in most companies?

Yes