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Book Reports
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The first is, throughput is the rate of which the system generates money through sales. The second, inventory is all the money that the system has invested in purchasing things which it intends to sell. The third, operational expense is all the money the system spends in order to turn inventory into throughput...
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In other words, for synchronized manufacturing, the goal of the firm, at the operational level, is to increase throughput while simultaneously reducing operating expense. Throughput is defined as goods sold. Inventory that is carried is valued only at the cost of the materials it contains. Operating expenses includes production costs, such as direct labor, indirect labor, inventory carrying costs, equipment depreciation, materials and supplies used in production, and administrative cost...
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