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29 Terms
1
Flow production
Making products in a continuous process, involving specialised workers or machines, usually in large quantities ('mass production').
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Total cost
Variable costs + Fixed costs. The overall cost of making products.
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3
Break-even graph/chart
Graph showing how cost and revenue change with output, and the break even point.
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4
Automation
A change to using robots in production, rather than workers.
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5
Quality control
Checking products at the end of production, to ensure that they meet quality standards.
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6
Break-even output
The quantity of products that need to be made/sold, for the total revenue to equal the total costs. Profit is zero.
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7
Job production
Making 'one-off' products to suit the customer's requirements, often using workers' skills, rather than machinery.
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8
Variable cost
A cost which vary directly with the number of products made.
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9
Break-even sales revenue
The value of total revenue needed to break-even.
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10
Diseconomies of scale
Factors which cause a rise in average costs as the business gets bigger.
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11
Kaizen
A lean production technique involving making continual improvement to the production process, often by seeking the help of workers to identify waste-saving ideas.
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12
Quality
Meeting customer expectations.
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13
Batch production
Making a group of identical products at the same time, often followed by a batch of a different style/type.
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14
Fixed cost
A cost that does not vary with the number of products made (output), e.g. rent, insurance.
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15
Total revenue/sales revenue/turnover/sales turnover
The value of products sold: number sold x price.
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16
Break-even point
Point where total revenue equals total cost and the business thus makes zero profit.
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17
Average cost (unit cost)
The cost of making one product. Total cost divided by output.
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18
Economies of scale
Cost savings which mean that average (unit) costs fall, as the business increases its size of output.
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19
Quality assurance
Identifying what is needed to meet customer expectations, setting targets for quality, committing resources to meet targets and measuring performance against targets.
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20
Location
Where a business chooses to site its operations, taking into account a number of location factors.
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21
Production
Creating a physical product ('good') or providing service OR Output of products (e.g. a business 'increased production').
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22
Lean production
Minimising waste, when making products, thus maximizing efficiency. Involves certain techniques, such as just-in-time.
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23
Operations management
The part of business activity involved in making the product.
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24
Labour productivity
Output per worker per period of time. Calculated by dividing output by number of workers.
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Output
How many products a business makes.
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26
Just-in-time
A lean production technique involving reducing the need to hold inventory by supplies arriving just before they are needed, in production.
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27
Productivity
Output made, measured against the input needed to make it. See 'labour productivity'.
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Efficiency
How well inputs are used to create outputs.
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29
Inventory (stocks)
Stocks of raw materials, semi-finished and finished products held by a business.
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