Throughput affects cash flow because is increases revenue. Inventory is the money invested to buy thing to be sold. Inventory is inversely proportional to cash flow, meaning if inventory increases, cash flow becomes restricted. Customer response time can be defined as market demand. Since customer response time is market demand, the more demand for a product the more opportunity you have to increase cash flow. Likewise, is customer response time is slow, you will have money tied in the system through inventory, decreasing cash flow. 2. How did Rogo improve his factory’s performance on each of these dimensions? Rogo created ID parts that have priority when going through the system. He matched inventory release with the movement of products through the two bottlenecks. He created a schedule for final assembly and then calculated the release of non-bottleneck material. He cut batch size in half so that set-up time was not increased. He cut in half the amount of time parts spend in the plant, thus increasing cash flow. Rogo swapped up break and lunch times. He added machines to process the bottleneck material. Rogo set up teams to maintain only the bottlenecks He created new ways to load the heat-treat and optimized loads going into the heat-treat.
Goal Assignment 1. In The Goal, how is cash flow affected by the throughput, inventory, and customer response time? • Throughput is the rate in which money can be generated/produced in sales. When it increases, profit and cash flow increase too. Furthermore, a decrease in throughput decreases the amount of cash flow. • In contrast, an increase in inventory generally leads to a decrease in cash flow because the money spent on inventory decreases throughput and cash flow. • Finally, to increase cash flow, the customer response time has to be as lowest as possible. This also increases throughput. • Low response time makes customers unsatisfied and unsatisfied customers decrease cash flow. Unsatisfied customers would change their demand from your company to your competitors. 2. How did Rogo improve his factory’s performance on each of these dimensions? • He processed all overdue orders to increase throughput, by selling more items. With the selling of more items, inventory decreased and a continuous flow is