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Measurements for Business

In The goal1, there are three simple metrics for measuring how an action within business fits with the goal of a company to make money:

Throughput: is the rate at which the system generates money through sales. Inventory: Inventory is all the money that the system has invested in purchasing things which it intends to sell Operational Expense: is all the money system spends in order to turn inventory into throughput

Ideally, throughput goes up, and the other two go down.


References

1.
Goldratt, E. M. The Goal: A Process of Ongoing Improvement. (North River Press, 2012).