the operational expense

Actually Alex’s plant has not been profitable for some time and because of that Bill gives an ultimatum to Alex to turn the plant around in 3 months or else the plant will be closed unless there are visible improvements. Due to the limited amount of time given, Alex almost gives up on the plant until Alex remembers his conversation with Jonah, his college physics professor. They happened to come across each other in the airport during Alex’s business trip. During that time, Jonah asked him several question to analyze his company situation.

This conversation then leads Jonah asking Alex, “What is the goal of your manufacturing company? ” Although Jonah didn’t give the answer to Alex but eventually Alex get the answer after rethinking their conversation. Alex realizes that the goal of his company or in fact any business is to make money. After finding out the answer, Alex then decide to contact Jonah one more time to consult further about his company. After contacting Jonah, Alex gets three measurements that can determine the success of a business.

The three measurements are throughput, or “the rate at which the system generates money through sales,” inventory, or “all the money that system has invested in purchasing things which it intends to sell,” and operational expense, or “all the money the system spends in order to turn inventory into throughput”. Using these measurements, Alex has a basis to determine if his decisions are helping the plant move towards the goal. The goal of the plant is to make money, which is characterized by increasing throughput and decreasing inventory and operational expense.

Alex decided to meet with Jonah in New York in order to fix their plant problem. But once again, Jonah leaves Alex with another question, what does the combination of “dependent events” and “statistical fluctuations” have to do with your plant? During the weekend, Alex went to a hiking trip with his son and got stuck as a ‘troop master’. During the hiking, Alex discovers Alex discovers the importance of “dependent events” in relation to “statistical fluctuations”. With this discovery, he also found out that the bottleneck’s speed of production is what determines the speed of the other dependents.

Hence, inventory moves very slowly because of statistical fluctuations. Back to the plant, Alex with his team begins their search for their plant’s bottlenecks. Then they found one the machine (NCX-10) and the heat treatment as the source plant’s bottlenecks. Alex invites Jonah to visit his plant in order to solve their bottlenecks problem. Jonah define bottleneck as any resource whose capacity is equal to or less than the demand placed upon it and a non-bottleneck is any resource whose capacity is greater than the demand placed on it.

With Jonah’s help, Alex and his team able to solve their bottlenecks problem such as perform the quality control testing before going into the bottleneck, do not produce parts for inventory – produce only what is in demand, produce smaller batches to increase productivity for the whole process, etc. One thing that they also learn from Jonah is that an hour lost at a bottleneck is an hour lost to the whole system. So, it is important to keep the bottleneck to keep moving all the times. With these changes in Alex’s plant, they are able to increase their production during the second and third month.

With the increase of production in their plant, Alex able to save his plant and he also promoted to Bill peach’s position. Regarding his personal life, Alex described as a dedicated and workaholic employee. His dedication to his work posed some family problems: losing time for his wife aside from her not being used to living at his hometown where there is a big difference from the city life his wife is used to. At one point, Julie, Alex’s wife leaves him because she’s tired of arguing and her attempt to save their marriage.

However, while Alex tries to save his plant, Alex also does the same thing with his marriage. II. Things I liked about the book What I liked about the book is that the book very informative and it is really easy to read. I think this book will be one of effective way to learn about management. Because it is the most efficient way to understand the challenges involved in the manufacturing processes. Unlike many books that take complicated ideas and oversimplify them so the ideas lose their meaning, this book simplifies ideas in ways that enhance their meaning by making the ideas easier to see and employ.

Another thing that I really like from this author is that he able to turn a relatively boring subject for some people to an exciting read. One more thing that I like is the way the author describe the characters in the story. I think many readers can relate to the characters in the book since what happen in the story is also happening in the real world. And the last one is I liked how the author include Alex personal life problem in the story. I think what the author trying to do is to inform his reader that there must be balance between personal life and work life.

You have to balance your personal life and work life, because eventually they will flow in and out of each environment. III. Critique of the book I don’t think I have any critique for the book since the book really helps me in understanding how management really works. One thing that I might complain might be some typo errors in the book. IV. Real life example From the book, we can see that the concept that Jonah gave can be apply not only for business problem but also problems that we deal within our daily life. I think we can definitely see it from the book during the hiking trip.

I think what we can do is asking ourselves with the question of “what is my goal in life, work, study and other things that we do? ” As a student, I think I can apply some of the concept in my studying. When I took a subject, the first thing that I want to know is what is my goal in taking this subject? After knowing that, if ever I encounter some problem like a probability of failing the subjects, I have to identify the source of my problem. Knowing the source of my problem will make it easier for me to decide how or what can I do in order to fix my problem.