Analyzing Eliyahu Goldratt's The Goal

In The Goal written by Eliyahu Goldratt, the main character, Alex Rogo, faces a simple yet complex problem of how to increases his plants profitability. From our Brewer textbook we have been learning how different activity levels affect operating income and how a manufacturing corporation can break even in terms of income and sales in chapter 5 of our Brewer textbook. In The Goal, Rogo’s plant is not meeting the demands of its clients and because of that, is not being profitable even through the use of robots and new ways of manufacturing. Throughout the book Alex faces many challenges in order to have his manufacturing plant not shut down. He thinks his plant is extremely efficient in terms of production but the goal of making money is not being met. Our accounting textbook overlaps with that of The Goal in many ways as The Goal illustrates …show more content…
Throughout the chapter, Alex questions Jonah to hopefully gain some answers on how to make his plant profitable and productive. What Alex ultimately settles on is that while his plant may be efficient according to some estimates, the problem is high inventories of merchandise and not meeting shipping dates (p. 29). In our Brewer textbook, concepts and objectives such as target profit analysis are used to set and make goals on obtaining certain profit levels. The Goal supports these conclusions through various examples. In chapter eight, when Alex speaks again with Jonah and Jonah tell three terms in which to run his plant, throughput, inventory, and operational expense. As long as operational expense is low and throughput is higher than inventory, profits will be made. By using estimates for each of these terms, a manufacturing plant can determine levels of sales and other expenses in order to set a operating income