University of Massachusetts Lowell
Operation Management
The Goal: A Process of Ongoing Improvement Summary
Alex Rogo is the Plant Manager for Uniware, a division of Unico. The story starts with an
upset customer approached Alexs boss, and Alex is asked to improve the plant in three
months. Due to the limited of time and resources availability such as consultants, Alex put
his hopes on his conversation with Janah, a physicist.
The Goal:
During the conversation, Jonah asks Alex questions to have details about the company in
order to analyze the situation. The conversation has leaded to an important question which
is What is the goal of any business? Under the point of view of a production line, the goal
will be to improve production productivity. Under the point of view of a marketing
manager, the goal may be to push up the sales. Overall, Alex has released that the overall
goal was to make money. Any actions supporting this goal are considered to be productive
and vice versa.
Manufacturing plant measurement related to money
Alex and Jonah have come up with measurements to define the success of production:
•Throughput: the ratio of output over input. For a product, this is the rate to generate
money through sales after deducting all expenses.
•Inventory: this is the cost of purchasing items that will be sold.
•Operational expense: the cost that turn inventory into output.
Relationship between the measures
The relationship between the three measures can be put into the following equation
Throughput =
Setting sights on high plant efficiencies
Through the equation above, to obtain the high throughput, we need to balance out the
