A great example. But as long as the company has demand, as Plant Manager, I was (“encouraged”, “coerced”) to provide both the Pints and Quarts (literally). We made far money than the P+ Q example suggests. I wonder how the profit statement would indicate if both the P+Q products were fulfilled.
As Eli Schragenheim stated ” as long as the delta in Throughput is greater than the delta in Operating Expenses.” …then the company can earn even more money.
Thanks! And I couldn’t agree more. If there’s demand we should always try to meet it. If our goal is to generate ‘goal units’ (£/$/€’s in this case), I’d personally never want to be turning away Q’s because I only had the capacity to fulfill P’s and some Q’s.
But agreeing to something with no practical way of meeting the demand is a recipe for disappointed customers. This highlights the importance of Goldratt’s Five Focusing Steps for me, as it provides us with a framework to challenge the assumptions/rules/policies/decisions we have previously made. For example, we’ve ‘decided’ that the Blue machine is only available for 2400 minutes in this exercise. Why? Who said it can’t be longer? Why not find more capacity? Even paying overtime rates is likely to result in higher delta T over delta OE.
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