Chapter Review of the Goal Essay
The first chapter gets the reader acquainted with Mr. Alex Rogo and his apparent problems with his production plant. This is shown through a confrontation between Mr. Rogo and his boss Mr. Peach, the Division Vice President. The dispute is over an overdue order #41427. Through their conversation it’s learned that Mr. Peach will not settle for anything less than the order being shipped today, and since the plant is neither productive nor profitable, Alex has three months to show an improvement or the plant will be shut down!
This chapter gives insight to Alex’s home life. Since moving back to his hometown six months ago, it seems adjustment isn’t going well for his family. It’s great for Alex, but it’s a …show more content…
Alex decides to leave the meeting at the break. He has no particular place he would like to go; he just knows this meeting isn’t for him, not today. He needs to understand what the "goal" is. After a pizza and a six pack of beer it hits him, money. The "goal" is to make money and anything that brings us closer to it is productive and anything that doesn’t isn’t.
Mr. Rogo sits down with one of his accountants and together they define what is needed in terms of achieving the goal. Net profit needs to increase along with simultaneously increasing return on investment and cash flow. Now all that is needed is to put his specific operations in those terms.
Alex makes the decision to stay with the company for the last three months and try to make a change. Then he decides he needs to find Jonah.
Alex finally speaks to Jonah. He is given three terms that will help him run his plant, throughput, inventory, and operational expense. Jonah states that everything in the plant can be classified under these three terms. "Throughput is the rate at which the system generates money through sales." "Inventory is all the money that the system has invested in purchasing things which it intends to sell." "Operational expense is all the money the system spends in