Operating expenses are defined as all the money the organization spends in turning
inventories into throughput and, therefore, represent all other money that an organization
spends. This includes direct labor and all operating and maintenance
expenses. Thus, throughput is a measure of money coming into an organization, inventory
measures the money tied up within the system, and operating expenses represent
money leaving the system. Based on these three measures, the objectives of
management can be expressed as increasing throughput, minimizing inventory, and decreasing
operating expenses