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At first, Rogo had numerous backlogged orders that were missing specific parts and, therefore, could not be shipped. Jonah points out that these backlogs represent unrealized throughput and, thus, unrealized sales and lower cash flows.
o Jonah defines inventory as ‘all the money the system has invested in purchasing things which it intends to sell.’ The factory was producing spare parts and stocking them instead of producing the specific parts needed to ship the overdue orders. Excess inventory hurts the factory’s cash flow because it reduced throughput.
o Initially, Rogo’s factory had a lot of backlogged orders (some by almost two months) and its customers were not impressed by the tardiness of the deliveries...
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