Cost of producing a single unit of output
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
Costs that don't change with output
Margin of safety
Difference between the current level of output and break even point
Achieving quality production by designing every process to get the product 'right first time' and preventing mistakes
Checking quality through inspection at the end of the production process
Fixed costs plus variable costs
Costs that change with output
The process of converting inputs like (raw materials and components) into finished products
Measure of efficiency by caluclated by dividing output by input
Making the best possible use of resources. Maximising outputs from inputs.
Stock of work in progress, raw materials, and finished products held by a business
Production of goods and servies with maximum efficiency and minimum waste
( '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
Producing a unique product, one at a time.
Producing goods in batches where all products must pass through one stage of production before moving onto the next
Constantly producing large quantities of identical goods
activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients.
achieving business objectives by using inputs productively to meet customers’ needs.
Value-added is the difference between the price of product or service and the cost of producing it.
High quantity of capital input compared to labour input
High quantity of labour input compared to capital input
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
Inventory level at which a company would place a new order
Time taken between placing an order and receving delivery.
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