| breakeven analysis | see cost-volume analysis.
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| breakeven point | the output level at which total cost = total revenue.
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| bottleneck operation | An operation in a sequence of operations (i.e., system) whose capacity is lower that of the other operations, and therefore limits output of the system.
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| capacity | the upper limit or ceiling on the load that an operating system can handle.
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| capacity alternatives | different levels of planned output having different cost structures for a range of outputs.
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| capacity cushion | an amount of capacity in excess of expected demand when there is some uncertainly about demand.
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| cash flow | the difference between cash received from sales and other sources and cash paid out for labor, material, overhead and taxes.
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| cost-volume analysis | focuses on relationships between cost, revenue, and volume of output.
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| cyclical factors | factors that affect the rate of output, based on the business cycle.
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| design capacity | the maximum rate of output achievable under ideal conditions.
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| economies of scale | if the output rate is less than the optimal level, increasing the output results in decreasing average unit costs.
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| effective capacity | an achievable rate of output that is usually less than the design capacity because of operational difficulties.
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| efficiency | the ratio of actual output to effective capacity, expressed as a percentage.
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| external factors | circumstances that affect the plant capacity and the rate of output, which are either externally imposed, such as health and safety regulations, or else negotiated, such as by union work rules.
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| facilities factors | characteristics of the design or location of the plant that affect the capacity of the plant.
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| financial analysis | planning for receipt and payout of funds and maintaining cash flow, taking into account the present value of funds to be received or paid out in the future.
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| fixed cost | those expenses which do not increase (or decrease) when the volume of output increases (or decreases).
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| human factors | the training, skill and experience of the employees.
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| make or buy decision | whether to produce a product (or provide a service) within the company or to buy it from another organization.
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| operational factors | scheduling problems, bottlenecks, equipment failures, or breakdowns in communication between different sections of the plant that affect performance and output.
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| outsourcing | obtaining a good or service from an external provider.
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| present value | the sum, in current value, of all future cash flows of an investment proposal.
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| process factors | quantity capabilities or quality characteristics of the product that affect performance and output.
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| product/service factors | factors that affect the rate of output, based on the degree of specialization in the product or service, or in the design of the production system.
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| utilization | the ratio of actual output to design capacity, expressed as a percentage.
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| variable cost | the total of per-unit material, labor and operational cost, assumed to be constant per unit of product in a linear breakeven model.
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