Theme 4

• Added value

  The increase in worth of a product or service because of the production process or additional features, measured by the difference between the selling price and the cost of inputs
• Labour productivity

  The measure of output produced per unit of labor input
• Unit costs

  The average cost per unit of output, calculated by dividing total production costs by the number of units produced
• Capacity

  The maximum level of output or production that a business can sustain over a given period with its existing resources
• Capacity utilisation

  The extent to which a business utilises its production capacity to meet demand, calculated as actual output divided by maximum possible output multiplied by 100
• Efficiency

  The ratio of output to input, measuring how well resources are utilised to achieve desired outcomes
• Just in time

  An inventory management approach that aims to minimise inventory levels by receiving goods only as they are needed in the production process
• Just in case

  An inventory management approach where businesses maintain higher inventory levels as a precaution to meet unexpected increases in demand or supply chain disruptions
• Lean production

  A production philosophy that emphasises minimising waste, improving efficiency and maximising value for customers through continuous improvement
• Labour productivity

  A production process or industry that requires a significant amount of labour relative to capital inputs
• Capital intensive

  A production process or industry that relies heavily on machinery, equipment or capital investment relative to labour inputs
• Quality assurance

  The systematic process of ensuring that products or services meet specified standards and conform to established quality criteria
• Quality control

  The process of inspecting, testing and monitoring products or services during and after production to ensure they meet predetermined quality standards
• Outsourcing

  The practice of contracting out certain business functions or processes to external third-party service providers
• Temporary employees

  Workers who are hired for a limited period to fulfill specific roles or tasks
• Part-time employees

  Workers who are employed for fewer hours than full-time employees, typically working on a regular schedule
• Producing to order

  A production strategy where goods are manufactured only after receiving customer orders, reducing the need for inventory storage and minimising waste
• Lead time


  The amount of time it takes for an order to be fulfilled from the moment it is placed until it is delivered to the customer
• Re-order levels

  The predetermined inventory level at which new orders should be placed to replenish stock and maintain sufficient inventory levels
• Buffer levels

  An additional inventory stock kept as a reserve to account for unexpected fluctuations in demand, supply chain disruptions or production delays
• Re-order quantity

  The quantity of goods that should be reordered when inventory levels reach the re-order point, ensuring continuity of supply