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26 Cards in this Set
- Front
- Back
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Capacity
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The upper limit or ceiling on the load that an operating unit can handle.
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Design capacity
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The maximum designed service capacity or output rate.
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Effective capacity
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Design capacity minus personal and other allowances.
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Capacity cushion
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Extra capacity used to offset demand uncertainty.
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Bottleneck operation
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An operation in a sequence of operations whose capacity is lower that of the other operations.
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Economies of scale
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If the output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs.
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Diseconomies of scale
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If the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs.
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Constraint
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Something that limits the performance of a process or system in achieving its goals.
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Break-even point (BEP)
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The volume of output at which total cost and total revenue are equal.
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Cash flow
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The difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes.
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Present value
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The sum, in current value, of all future cash flows of an investment proposal.
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Payoff table
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Table showing the expected payoffs for each alternative in every possible state of nature.
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Bounded rationality
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The limitations on decision making caused by costs, human abilities, time, technology, and availability of information.
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Suboptimization
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The result of different departments each attempting to reach a solution that is optimum for that department.
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Certainty
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Environment in which relevant parameters have known values.
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Risk
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Environment in which certain future events have probable outcomes.
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Uncertainty
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Environment in which it is impossible to assess the likelihood of various future events.
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Maximin
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Choose the alternative with the best of the worst possible payoffs.
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Maximax
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Choose the alternative with the best possible payoff.
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Laplace
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Choose the alternative with the best average payoff of any of the alternatives.
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Minimax regret
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Chose the alternative that has the least of the worst regrets.
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Regret (opportunity loss)
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The difference between a given payoff and the best payoff for a state of nature.
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Expected monetary value (EMV) criterion
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The best expected value among the alternatives.
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Decision tree
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A schematic representation of the available alternatives and their possible consequences.
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Expected value of perfect information (EVPI)
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The difference between the expected payoff with perfect information and the expected payoff under risk.
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Sensitivity analysis
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Determining the range of probability for which an alternative has the best expected payoff.
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