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