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