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12 terms

Operations 310 - Chapter 5

STUDY
PLAY
bottleneck operations
an operation in a sequence of operations whose capacity is lower than that of the other operations
break-even point (BEP)
the volume of output at which total cost and total revenue are equal
capacity
the upper limit or ceiling on the load that an operating unit can handle
capacity cushion
extra capacity used to offset demand uncertainty
cash flow
the difference between cash received from sales and otehr sources, and cash outflow for labor, material, overhead, and taxes
constraint
something that limits the performance of a process or system in achieving its goals
design capacity
the maximum designed service capacity or output rate
diseconomies of scale
if the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs
economies of scale
if the output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs
effective capacity
design capacity minus personal and other allowances
indifference point
the quantity that would make two alternatives equivalent
present value
the sum, in current value, of all future cash flows of an investment proposal