It has been described those three operational measures were throughput, inventory, and operational expenses. Throughput might be described as the rate money is generated through sales. Inventory might be described as the money used to invest in things not sold yet. Operational expenses are all the money spent to turn inventory into throughput. The measure used to describe goods sold is throughput, and understanding the rate of throughput could provide information on the direction of an organization. Throughput not sold but intended to be sold would be inventory. If one sees inventory increasing without the prospects of improved throughput, then that is a concern. When it comes to operational expenses, one of the most important components of operating expenses is labor costs versus productivity. Throughput rate and inventory levels were the two measures I paid the most attention to in my businesses. If I saw inventory rates increasing and throughput not increasing, I became very concerned. If throughput was not following the trend I believed necessary for the success of the business, then I would look at operational expenses with a specific focus on labor costs and productivity.

After reviewing the operational measures, which single measure do you believe is the most important and why?