by Dr Lisa | Theory of Constraints for Strategy
Question: You mention in your speech that TOC (Goldratt’s Theory of Constraints) is about the 99/1 Rule, not the 80/20 Rule. Can you explain that? Answer: Let’s start by talking about the 80/20 Rule. The 80/20 Rule, also called the Pareto Principle was made...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Question: Should I factor (sell) my receivables? I could use the cash, but the cost seems too high. How do I make this decision? Answer: This question is hard to answer without more information, so let’s look at an example: Let’s say it costs you $40 to make a...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Cash Velocity Summary There are two cash velocity rules: ● Make sure that the amount and rate of cash flowing in is enough to cover all your business and personal needs ● Be paranoid. Unfortunately, stuff happens. And unless you’re willing to risk losing your passion,...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Increasing Throughput — Other Considerations In previous sections we have covered raw materials and how to reduce them. We also need to cover WIP (Work In Process) and finished goods inventory. DBR Scheduling* reduces WIP by releasing raw materials at the rate...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Increase Sales cont. Last time we ended our discussion with this question: So how do you increase your throughput without going into cash trouble? The first step is to examine your product mix. Calculate the T/CU for each product. With this information you can devise...
