Business 101 medterm 2

production

The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production)

production management

All the activities managers do to help firms create goods.

operations management

A specialized area in management that converts or transforms resources into goods and services. Which includes:

Inventory management

Quality control

Production scheduling

Follow-up services

production process inputs

land, labor, capital, entrepreneurship, knowledge

production process production control

planning, routing, scheduling, dispatching, follow-up

production process outputs

goods, services, ideas

process manufacuring

The part of production that physically or chemically changes materials.

assembly process

The part of the production process that puts together components.

continuous process

Long production runs turn out finished goods over time.

intermittent process

Production runs are short and the producer adjusts machines frequently to make different products.

computer-aided design (CAD)

The use of computers in the design of products.

Computer-aided manufacturing (CAM)

The use of computers in the manufacturing of products.

Computer-integrated manufacturing (CIM)

The uniting of computer-aided design with computer-aided manufacturing. It is expensive … but it cuts as much as 80% of the time needed to program machines to make parts.

lean manufacturing

Using fewer resources compared to mass production.

Compared to others, it:

Take half the human effort.

Have half the defects in finished products.

Require one-third the engineering effort.

Use half the floor space.

Carry 90% less inventory.

mass customization

Tailoring products to meet the needs of a large number of individual customers.

facility layout

The physical arrangement of resources, including people, to most efficiently produce goods and provide services.

Depends on the processes performed:

Service: Help customers find products

Manufacturing: Improve efficiency

assembly line layout

Workers do only a few tasks at a time.

modular layout

Teams of workers produce more complex units of the final product.

fixed-position layout

Allows workers to congregate around the product.

process layout

Similar equipment and functions are grouped together.

purchasing

The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services.

quality

Consistently producing what the customer wants while reducing errors before and after delivery.

six sigma quality

A quality measure that allows only 3.4 defects per million opportunities.

six sigma process

the process of defining->measuring->analyzing->improving->controlling

Program Evaluation and Review Technique (PERT)

A method for analyzing the tasks involved in completing a given project and estimating the time needed. It includes Analyzing and sequencing tasks

Estimating the time needed to complete each task

Drawing a network illustrating the first two steps

Identifying the critical path

critical path

the sequence of tasks that takes the longest time to complete.

gant chart

A bar graph that shows what projects are being worked on and how much has been completed.

accounting

Recording, classifying, summarizing and interpreting of financial events and transactions in an organization to provide interested parties needed financial information.

accounting profession

analyze source documents->record transactions in journals->transfer journal entries to ledger->take a trial balance->prepare financial statements->analyze financial statement

marginal accounting

Provides information and analysis to managers inside the organization to assist them in decision making.

It is involved with:

Costs of production

Costs of marketing

Preparation and control of budgets

Minimizing tax liabilities

Financial accounting

Financial information and analyses are generated for people primarily outside the organization. Outside users are interested in these questions:

Is the organization profitable?

Is it able to pay its bills?

How much debt does it owe?

annual report

A yearly statement of the financial condition, progress, and expectations of the firm.

assets

= Liabilities + Owners Equity

The value of the stuff the organization controls

profit

Revenue - Expense =

financial statements

A summary of all the financial transactions that have occurred over a particular period. Which include:

Balance sheet

Income statement

Statement of cash flows

liabilities

The debt claims against the stuff

owner's equity

The owners' claims (what they actually own) of the stuff

balance sheet

document includes Assets

Loans

Retained Earnings

Owners Equity

Inventory (value)

Plant & Equipment

Accounts Receivable

Accounts Payable

income statement

The story of transactions over a specific time period includes:

Sales (or Revenue)

Fixed Costs

contribution margin

Cost of Goods Sold (or COGS)

Depreciation

Expenses - Interest and Taxes

revenue transactions

transactions between businesses and its customers

expense transactions

transactions between business and it supplies such as resources people and capital

net income or net loss

the difference between revenue and expense

variable costs

(Cost of Goods Sold: COGS) The more you make, the greater the cost

Labor used to make product or service

Material to make product or service

Cost of keeping inventory

fixed costs

(Operating Expense) The cost of being in business that month

Selling expenses

Administrative expenses, also includes depreciation, selling, general and administration, R&D, marketing

contribution margin

sales-variable cost

the amount of money left after you pay for the products you sell

it is a measure of the efficiency of your production process

Net margin

contribution margin - Total Period

Earnings Before Interest & Taxes (EDIT)

net profit

profit net income earnings return bottom line of an income statement

retained earning

the company "reinvests" the income

dividend

profit given to the stockholders

income

profit given to partners or sole proprietor

cash flow statement

Shows movement of cash in and out of an organization over a given period of time