Module 5 ALL VOCAB (SL)

Break Even Analysis

a management tool used to calculate the level of sales needed to cover all costs of production, where any more sales will generate profit

Break Even Chart

the name given to the graph that shows a firm's costs, revenues, and profits (or loss) at various levels of output

Break Even Point

the position on the break-even chart where the total cost line intersects the total revenue line (where TC=TR)

Break Even Quantity

the level of output that generates neither a profit nor loss.

Contribution

the sum of money that remains after all direct or variable costs have been deducted from the sales revenue of a product.

Contribution per unit (Unit Contribution)

the difference between the selling price of a product and its variable costs of production. The surplus goes towards paying fixed costs

Loss

this exists when a firm's total costs exceed its total revenues. This occurs at all levels of output or sales below the break even quantity.

Margin of Safety

the difference between a firm's level of demand and its break even quantity.

Profit

the positive difference between a firm's revenue and its costs.

Target Price

the price set by a firm in order to reach break even or a certain target profit

Target Profit

the amount of surplus a firm intends to achieve, based on price and cost data. It is calculated by deducting total costs from expected sales revenues.

Target Profit Output

the sales volume or level of output required to achieve the target profit that business managers expect to achieve by the end of a given time period.

Total Contribution

essentially, a firm's gross profit

Factors of Production

the resources needed to produce a good or service, namely land, labor, capital and enterprise

Operations Management (aka Production)

the function concerned with providing the right goods and services in the right quantities and at the right quality level in a cost-effective and timely manner

Production Process

the method of turning factor inputs into outputs by adding value in a cost-effective way

Productivity

a measure of a firm's operational efficiency level, calculating the rate at which inputs (factors of production) are transformed into outputs (goods and services).

Sustainability

this promotes intergenerational equity, i.e. production enables consumption of goods and services for the people of today without compromising consumption for future generations

Value-added

this occurs during the production of a good or service because the value of the output is greater than the costs of production. Businesses cannot earn a profit if this does not occur in the production process.

Batch Production

producing a set of identical products. Typically used where the demand for a product is frequent and steady.

Capital Intensive

the manufacturing or provision of a product relies heavily on machinery and equipment, such as automated production systems

Flow Production

this type of production uses continuous and progressive processes, carried out in sequence. When one task is completed, the next stage of production starts immediately

Mass Customization

an operations method that uses flexible manufacturing systems to mass produce products that meet individual consumer needs and wants.

Mass Production

this type of production involves large-scale manufacturing of a homogeneous (standardized) product. Unit costs of production are relatively low when using these methods.

Job Production

this type of production involves the manufacturing of a unique or one-off product. It can be completed by one person or by a team of people.

Labor Intensive

production that relies heavily on labor inputs, so the cost of labor accounts for the largest proportion of a firm's overall production costs. It is most apparent in the provision of personalized services.

Standardization

producing an identical or homogeneous product in large quantities, such as printing a particular magazine, book or newspaper

Assisted Areas (aka Enterprise Zones)

regions identified by the government to be suffering from relatively high unemployment and low incomes, so are in need of regeneration through financial assistance.

Bulk-increasing Businesses (aka Weight-gaining Industries)

firms that are involved with products that increase in weight during the production process, so need to be located near their customers in order to reduce costs

Bulk-reducing Businesses

firms that need to locate near the source of raw materials because they are heavier, and hence more costly, to transport than the final product

Clustering

when a business locates near other organizations that operate in similar or complementary markets

Footloose Organization

a business that does not gain any cost reducing advantages from locating in a particular location. Hence, the firm can locate in almost any location

Government Incentives

financial enticements offered by the state to businesses to locate in a particular area or region, perhaps due to high unemployment

Industrial Inertia

the reluctance to relocate due to the inconvenience of moving. Managers may feel that the potential inconveniences and costs of relocation outweigh the benefits

Infrastructure

the term used to describe the transportation, communication and support networks in a certain area

Insourcing

the use of an organizations own people and resources to accomplish a certain function or task which would otherwise have been outsourced

Location

the geographical position of a business.

Offshoring

this involves relocating business functions and processes overseas. These functions can remain within the business (with overseas operations) or outsourced to an overseas organization.

Outsourcing (aka Subcontracting)

the practice of transferring internal business activities to an external organization to reduce costs and increase productivity

Reshoring

the reverse of offshoring; the transfer of business operations back to their country of origin

Subcontractors

outsourced firms that undertake non-core activities for an organization. They are used for their expertise and cost advantages they bring such as accountancy services