Term
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Definition
| on-time order that is not considered part of the company's normal ongoing busisness |
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Term
| when should special order be accepted |
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Definition
| if the incremental revenue from special order exceeds incremental costs of the order |
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Term
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Definition
| a future cost that differs between any two alternatives |
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Term
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Definition
| future revenue that differs between any two alternatives |
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Term
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Definition
| an increase in cost between two alternatives |
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Term
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Definition
| a cost that can be eliminated by choosing one alternative over another in a decision |
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Term
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Definition
| a cost that has already been incurred and that cannot be changed by any decision made or in the future |
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Term
Key Concepts to understand to make decisions
1/6 |
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Definition
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Term
Key Concepts to understand to make decisions
2/6 |
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Definition
| Identify the criteria for choosing among them |
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Term
Key Concepts to understand to make decisions
3/6 |
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Definition
| differential analysis, focusing on the future costs and benefits that differ between alternatives |
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Term
Key Concepts to understand to make decisions
4/6 |
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Definition
| sunk cost are never relevant when choosing among alternatives |
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Term
Key Concepts to understand to make decisions
5/6 |
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Definition
| future costs and benefits that do not differ between alternatives are irrelevant to decision making process |
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Term
Key Concepts to understand to make decisions
6/6 |
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Definition
| Opportunity costs also need to be considered when making decisions |
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Term
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Definition
| the potential benefit that is given up when one alternative is selected over another |
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Term
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Definition
| future cost sand benefits that do not differ between alternatives |
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Term
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Definition
| a limitation under which a company must operate, that restricts the company's ability to satisfy demand |
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Term
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Definition
| a machine or some other part of a process that limits the total output of the entire system |
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Term
| 1st step to strengthen the chain |
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Definition
| identify the weakest link, the constraint |
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Term
| 2nd step to strengthen the chain |
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Definition
| do not strain the weakest link |
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Term
| 3rd step to strengthen the chain |
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Definition
| concentrate improvement efforts on strengthening the weakest link |
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Term
| 4th step to strengthen the chain |
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Definition
| maintain improvement efforts and identify the new weakest |
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Term
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Definition
| companies need to focus on maximizing the contribution margin per unit of constraint |
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Term
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Definition
| when a manager increases the capacity of the bottleneck |
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Term
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Definition
| idle space that has no alternative |
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Term
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Definition
| a decision concerning whether an item should be produced internally or purchased from an outside supplier |
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Term
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Definition
| involvement by a company in more than one of the acts in the entire value chain from development through production |
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Term
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Definition
| acts ranging from development to production to after-sales service |
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Term
| Volume Trade-off decisions |
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Definition
| when company cannot meet demand, so must sacrifice production of some products in favor of others to maximize profit |
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