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A manufacturing company can apply the concept of Throughput to increase their profits by focusing on the rate at which they generate money through sales after expenses. This involves optimizing the production process to increase the rate of output while minimizing costs. They can do this by reducing inventory costs, which includes not only products or stock, but also investments spent for equipment, property, and anything else necessary to the business. Additionally, they can manage their operating expenses, which are all the money the system spends in order to turn inventory into throughput. By managing these aspects, a company can increase their throughput, thereby increasing their profits.
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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.
Asked on the following book summary:
The Goal uses simple reasoning as a tool to teach the Theory of Constraints (TOC) by presenting the theories in the form of a novel. The TOC, a method...
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