By:-By:- Srishti Mehra – 61Srishti Mehra – 61 Dishita Modi – 71Dishita Modi – 71 Shreya Sanil – 91Shreya Sanil – 91 Neeli Shah – 101Neeli Shah – 101 Nikita Sheth - 106Nikita Sheth - 106 Payal Tachak– 111Payal Tachak– 111

About the AuthorAbout the Author

An educator, author, scientist, philosopher & business An educator, author, scientist, philosopher & business leader.leader.

Obtained bachelors & masters degree in the field of Obtained bachelors & masters degree in the field of science and doctrate of philosophy.science and doctrate of philosophy.

He holds a number of patents in the areas from He holds a number of patents in the areas from medical devices to drip irrigation to temperature medical devices to drip irrigation to temperature sensors.sensors.

He has also written a lot of various books such He has also written a lot of various books such as:as:

1. Production The Toc Way1. Production The Toc Way2. It’s Not Luck2. It’s Not Luck3. Critical Chain3. Critical Chain4. The Race4. The Race5. What Is This Thing Called TOC ?5. What Is This Thing Called TOC ?6. The Haystack Syndrome6. The Haystack Syndrome7. Necessary But Not Sufficient7. Necessary But Not Sufficient8. The Choice and many more………8. The Choice and many more………

Introduction To The Book Introduction To The Book “THE GOAL”“THE GOAL”

It’s a different type of management book.It’s a different type of management book.

It has reached a sale of eight million copies.It has reached a sale of eight million copies.

This book is in effect a disquisition on This book is in effect a disquisition on production management, in which the author has production management, in which the author has expounds the theory of constraints.expounds the theory of constraints.

This book is in the form of a novel as This book is in the form of a novel as suspenseful as a thriller and equally fast-paced.suspenseful as a thriller and equally fast-paced.

The Author has used the Socratic inductive The Author has used the Socratic inductive reasoning to teach his Theory Of Constraints.reasoning to teach his Theory Of Constraints.

It is a business textbook written in the novel-It is a business textbook written in the novel-form, disguised as a love story.form, disguised as a love story.

It is an underground best seller that utilizes a It is an underground best seller that utilizes a non-traditional approach to convey important non-traditional approach to convey important business information.business information.

This book underscores Dr. Eliyahu Goldratt’s Theory of Constraints, an overall framework for helping businesses determine:

1. What to change – what is the leverage point.

2. What to change to – what are the simple practical solutions.

3. How to cause the change – overcoming the inherent resistance to change.

The book is also about global principles of manufacturing.

Dr. Goldratt’s ideas are surprisingly applicable in manufacturing and service organizations.

From this book one can in improving organizational effectiveness and productivity, free up capital tied up in excess inventory, reduce customer frustration and organizational anxiety.

IntroductionIntroduction

Story about a young executive – Alex Rogo. Story about a young executive – Alex Rogo. Done his engineering under graduation and an Done his engineering under graduation and an

MBA.MBA. Started career in UniCo as project manager and Started career in UniCo as project manager and

now works under Bill Peach as plant manager in now works under Bill Peach as plant manager in Bearington, his hometown.Bearington, his hometown.

Factory produces machined assemblies.Factory produces machined assemblies. Well trained staff led by highly experienced Well trained staff led by highly experienced

managers.managers.

Current scenarioCurrent scenario

Orders bordering 2 months behind scheduled Orders bordering 2 months behind scheduled delivery date.delivery date.

20 $ million unsold finished goods inventory 20 $ million unsold finished goods inventory lying in ware house.lying in ware house.

Facing an increasing cash shortage.Facing an increasing cash shortage. Efficiency heading downward.Efficiency heading downward. If no improvement- shutdown.If no improvement- shutdown. Deadline- 3 monthsDeadline- 3 months

New hopeNew hope

Running into old physics professor Jonah.Running into old physics professor Jonah. Key identifiers of productivity- decreasing Key identifiers of productivity- decreasing

inventory, reducing expenses and selling more inventory, reducing expenses and selling more product.product.

Jonah leaves Alex to ponder upon the concept of Jonah leaves Alex to ponder upon the concept of productivity.productivity.

What is the GOAL?What is the GOAL?

Question left by Jonah: Question left by Jonah: What is the Goal ?What is the Goal ?

Make productMake product Increase market shareIncrease market share Produce quality productsProduce quality products Produce efficientlyProduce efficiently Hire workersHire workers Support the city, state and national economySupport the city, state and national economy Increase stockholder valueIncrease stockholder value

measurements of measurements of productivityproductivity

The 3 basic measurements of productivity:The 3 basic measurements of productivity:

Throughput (TP)Throughput (TP)Rate at which system generates money through sales.

Sales Revenue - Raw material Expense Inventory (I)Inventory (I)All the money that the system has invested in

purchasing things which it intends to sell Operational Expense (OE)Operational Expense (OE)All the money that the system spends in order to turn

inventory into throughput

Hiking with sonHiking with son

ALEX’S OBSERVATION..ALEX’S OBSERVATION..

Final throughput is measured by the rate of the Final throughput is measured by the rate of the last and slowest operation in the sequence. last and slowest operation in the sequence.

Inventory is equal to the length between the Inventory is equal to the length between the leader and the backdoor, which should be leader and the backdoor, which should be minimized. minimized.

Operational expense is roughly measured by the Operational expense is roughly measured by the energy expended, which must be conserved. energy expended, which must be conserved.

Some resources need to have more capacity than Some resources need to have more capacity than others, especially towards the end of the others, especially towards the end of the operating sequence. operating sequence.

Towards improvementTowards improvement

Returns to plant to confirm information.Returns to plant to confirm information. Introduces bottlenecks and non-bottle necks.Introduces bottlenecks and non-bottle necks. Objective- maintain capacity slightly less than Objective- maintain capacity slightly less than

demand.demand. 6 months lead time to train NCX-10 operators.6 months lead time to train NCX-10 operators. Trained operators are leaving the company.Trained operators are leaving the company. Hidden excess capacity.Hidden excess capacity.

Considering alternate processes.Considering alternate processes. Quality control.Quality control. Zero defect.Zero defect. Total plant capacity = Bottleneck capacityTotal plant capacity = Bottleneck capacity Bottleneck defines plant throughput.Bottleneck defines plant throughput. Bottleneck per unit cost = Bottleneck per unit cost =

Total plant operating costTotal plant operating cost

Total production bottleneck hoursTotal production bottleneck hours

Activating a resource and utilizing a resource are Activating a resource and utilizing a resource are non- synonymous.non- synonymous.

Activating – simply turning it on.Activating – simply turning it on. Utilizing - making use and moving towards the Utilizing - making use and moving towards the

goal.goal. Material release system.Material release system. Reduce batch sizes.Reduce batch sizes. Four primary time components include: setup Four primary time components include: setup

time, process time, queue time. time, process time, queue time.

Potential to respond better to demand markets.Potential to respond better to demand markets.

Solid profits and decreasing operating costs.Solid profits and decreasing operating costs.

Alex announces his promotion.Alex announces his promotion. Bob - plant managerBob - plant manager Stacy – production manager.Stacy – production manager. Removal of tags.Removal of tags. Further market expansion.Further market expansion.

Three fundamental Three fundamental decision issuesdecision issues

Alex and Lou identify three fundamental Alex and Lou identify three fundamental decision issues as critical to the success of any decision issues as critical to the success of any manager: manager:

1.1. Knowing what to change. Knowing what to change.

2.2. What to change to. What to change to.

3.3. How to cause the change. How to cause the change.

ConclusionConclusion

Dr. Eliyahu Goldratt states, Dr. Eliyahu Goldratt states, “Production is the heart of industry. “Production is the heart of industry. Industry is the heart of a nation’s Industry is the heart of a nation’s wealth”wealth” and concluding he hopes that and concluding he hopes that his book and theories help in his book and theories help in strengthening it.strengthening it.