The Goal

What does Alex determine “The Goal” is?
To make money!!

How do the “making money” measures translate to the production environment? (Jonah’s translation)
Throughput – Is the rate at which the system generates money through “Sales”
Inventory – all the money that the system has invested in purchasing things which it intends to sell.
Operational Expenses – all the money the system spends in order to turn inventory into throughput.

“Due to two phenomenon:
1. Dependent events – a series of events must take place before another begins.
2. Statistical Fluctuations – the length of events and outcomes are not completely deterministic.
The combination of these phenomenon are the issue.”

Q. - Where does Alex first come to grips with this (i.e. sees this first hand)?
A. – During the boy scout hike

Boy scout hike –> Manufacturing Plant
Observations:
Each boy is an operation
The product is “walk the trail”
Each boy/operation is dependent on the one in front.
A “sale” is when the last operation/boy walks the trail.
Throughput is the rate at which the last person walks the trail.
Operating expense is the energy output of each boy.
Inventory (material inside the plant) is the distance between the first and last boy.
Fluctuations in operating speed is causing inventory to increase and causing throughput to decrease. Attempting to reduce gaps is increasing operating expense.

Continuing with the Boy scout hike
Q. How does Alex fix the boy scout hike?
A. Puts kids in order from slowest first to fastest last. The line then stays compressed (i.e. inventory has gone down and progress has improved because Herbie is setting the pace and doesn’t have to exert energy to catch up).
Q. How do they further improve throughput?
A. Off-loaded Herbie’s backpack. In oherwords, they improved Herbie’s throughput so the entire boy troop’s throughput improved.

Q. What does Jonah suggest they do next?
A. Distinguish between bottleneck and non-bottleneck resources.
Definition:
Bottleneck – any resource whose capacity is equal to or less than the demand placed upon it.
Non-bottleneck – any resource whose capacity is greater than the demand placed upon it.

Q. What determines the flow of product through the plant.
The bottleneck resources.

Dependent Events

An event , or a series of events, that must take place before another can begin. The hike to Devil’s Gulch dependent events was the line in which the scouts walked. The first person in line must walk the trail before the person behind them could.

Statistical Fluctuations

A task in which the time to complete the task will vary each time the task is performed. This variance is known as a statistical fluctuation. Alex figured that the boys were walking and average of 2 mph. At times some were walking 2.5 mph and at other times some were walking 1.2 mph. The variance in speeds statistical fluctuations.

Back to the story:
Q. Where does Alex and company find the bottleneck?
A. They find two bottlenecks, NCX-10 and Heat Treat
Q. What is thier first approach to improving the flow through the bottlenecks and ultimately improving productivity.
1. Move QC in front of bottlenecks.
2. Make a list of all late jobs and what