Discrete event simulation

Introduction

A few years ago Eliyahu Goldratt visited Alcatel Bell Telephone Manufacturing in Antwerp. Nowadays the company is part of Alcatel-Lucent Bell The purpose of the visit was to discuss the company’s profitability issues. In a meeting with the management of the company his first question was: “What is the goal of your manufacturing organization?” Several ideas and opinions were brought up by the members of the management. The only answer that everybody agreed upon was: “The goal of a firm is to make money and be profitable”. Without that goal a company’s existence is in danger. There are several financial tools to measure this goal. The most important are net profit, return on investment and cash flow. But how can a Chief Operation Officer decide and act in order to improve these financial goals? Goldratt answers this question with his theory of constraints