
The upper limit or ceiling on the load that an operating unit can handle.
Capacity

The maximum designed service capacity or output rate.
Design Capacity

Design Capacity minus personal and other allowances
Effective Capacity

Extra Capacity used to offset demand uncertainty
Capacity Cushion

An operation in a sequence of operations whose capacity is lower than the other operations
Bottleneck Operation

If the output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs.
Economies of scale

If the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs.
Diseconomies of scale

Something that limits the preformance of a process or system or system in achieving its coals.
Constraint

The volume of the output at which total cost and total revenue are equal
Breakeven point (BEP)

The difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes.
Cash Flow

The sum, in current value, of all future cash flows of an investment proposal.
Present Value

Table showing the expected payoffs for each alternative in every possible state of nature.
Payoff Table

The limitations on decision making caused by the coasts, human abilities, time, technology, and availability of information.
Bounded Rationality

The result of different departments each attempting to reach a solution that is optimum for that department.
Suboptimization

Enviroment in which certain future events have probable outcomes.
Risk

Enviroment in which it is impossible to assess the likelihood of various future events
Uncertainty

Choose the alternative with the best of the worst possible payoffs.
Maximin

Chooses the alternative with the best possible payoff
Maximax

Choose the alternative with the best average payoff of any of the alternatives.
Laplace

Choose the alternative that has the least of the worst regrets.
Minimax regret

The difference between a given payoff and the best payoff for a state of nature.
Regret (Opportunity Loss)

The best expected value among the alternatives
Expected monetary value (EMV) criterion

A schematic representation of the available alternatives and their possible consequences.
Decision Tree

The difference between the expected payoff with perfect information and the expected payoff under risk.
Expected value of perfect information (EVPI)

Determining the range of probability for which an alternative has the best expected payoff
Sensitivity Analysis

Enviroment in which relevant parameters have known values
Certainty

