Question
Throughput, as explained in 'The Goal', refers to the rate at which an organization generates money through sales, after accounting for expenses. It's a key concept in the Theory of Constraints (TOC), which is the central theme of the book. Throughput is essentially the pace at which a business can convert its inventory and operational expenses into revenue. It's important to note that fixed costs such as leases and payroll are considered as part of the operating expenses, and they occur regardless of whether throughput increases or decreases.
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Throughput: This term describes the rate at which an organization generates money through sales after expenses. Inventory: This measurement includes not only products or stock, it includes all investments spent for equipment, property, and anything else necessary to the business. Operating Expense: This is described in the book as "all the money the system spends in order to turn inventory into throughput." Readers will learn that fixed costs like leases and payroll happen whether throughput increases or decreases.
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