Average costs
Cost of producing a single unit of output
Break even
The level of output where sales revenue is the same as total costs, neither a profit or loss is made
Diseconomies of scale
Factors that result in average price of production increasing as output increases
Economies of scale
Factors that result in average price of production decreasing as output increases
Fixed costs
Costs that don't change with output
Margin of safety
Difference between the current level of output and break even point
Quality assurance
Achieving quality production by designing every process to get the product 'right first time' and preventing mistakes
Quality control
Checking quality through inspection at the end of the production process
Total Costs
Fixed costs plus variable costs
Variable costs
Costs that change with output
Production
The process of converting inputs like (raw materials and components) into finished products
Productivity
Measure of efficiency by caluclated by dividing output by input
Efficiency
Making the best possible use of resources. Maximising outputs from inputs.
Inventory
Stock of work in progress, raw materials, and finished products held by a business
Lean Production
Production of goods and servies with maximum efficiency and minimum waste
Kaizen
( 'continuous improvement') constantly introducing small changes in a business in order to improve quality and/or efficiency.
Just in time (inventory management)
is an inventory management method where supplies arrive exactly when needed in the production process
Job production
Producing a unique product, one at a time.
Batch production
Producing goods in batches where all products must pass through one stage of production before moving onto the next
Flow production
Constantly producing large quantities of identical goods
Transformation Process
activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients.
Effectiveness
achieving business objectives by using inputs productively to meet customers’ needs.
Value Added
Value-added is the difference between the price of product or service and the cost of producing it.
Capital Intensive
High quantity of capital input compared to labour input
Labour intensive
High quantity of labour input compared to capital input
Process Innovation
is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software
Internal Economies of scale
Economies of scale achieved within an organisation
Reorder Level
Inventory level at which a company would place a new order
Lead Time
Time taken between placing an order and receving delivery.
Buffer Inventory
supply of inputs held as a reserve in case of unexpected changes in demand or supply.
External Economies of scale
Economies of scale achieved outside the firm due to larger changes with an industry