The Goal: Paper
Tyler Thorne
Managerial Accounting
BUAD-162
Eric Blazer
November 22, 2015
Alex Rogo manages a production plant that is owned by UniCo Manufacturing. At Alex’s
plant everything is always behind schedule. He is given three months to turn his nonprofitable
and unreliable plant to being a successful business or else everyone is out of a job. In order for
Alex to turn his plant around in just three months he gets help from a physicist named Jonah,
along with Lou, Stacey, Bob Donovan, and Ralph who all work in the plant. For the sake of the
company they all need to figure out why they are shipping products weeks and even months after
their due date and why they are not making any profit.
First, Alex needs to figure out what the goal of a manufacturing organization is. With the
help of Jonah, Alex figures out that the goal of any manufacturing organization is to make
money. Jonah explains that there is more then one way which expresses the goal of making
money. By providing a foundation for achieving change through theory of constraints by defin-
ing a set of three essential measurements that drive the chance process. Then realized that con-
ventional accounting systems do not support theory of constraints, or lean-based efforts. A con-
straint is something that limits the amount of output your company can produce. He proposed re-
placing all traditional measures derived from the “product cost” accounting paradigm. The fol-
lowing ways are how to increase profit through theory of constraints: throughput, inventory, and
operational expense. Throughput is the rate at which the system generates money through sales.
In chapter 10, Alex and his team, discuss how throughput equals “cash in,” operating expense
equals “cash out,” and inventory equals “cash tied up.” It then turns out that the goal of any orga-
nization is to increase throughput while simultaneously reducing both inventory and operational
expense
Jonah then introduces Alex to the theory of constraints. The steps to theory of constraints
in order to improve the performance of a system are as follows. Step one: Identify the system’s
constraints. Step two: Decide how to exploit the system’s constraints. Step three: subordinate ev-
erything else to exploit the constraints. Step four: Elevate the system’s constraints. Step five: If in
the previous steps a constraint has been broken, go back to step one, but do not allow inertia to
cause a system constraint, as stated in chapter 37. Following these steps will help you manage a
