25. Glossary Flashcards
Outsourcing
Definition
Using another business (a third party) to undertake a part of the production process rather than doing it within the business using the firms’s own employees.
Capacity utilisation
Definition
The proportion of maximum output capacity current being achieved
Maximum (full) capacity
Definition
The highest level of sustained output that can be achieved
Excess capacity
Definition
This exists when the current levels of output are less than the full capacity output of a business; also known as spare capacity
Rationalisation
Definition
Reducing capacity by closing factories/production units
Capacity shortage
Definition
When demand for a business’s products exceeds production capacity
Business process outsourcing
Definition
A form of outsourcing that uses specialist contractors to take responsibility for certain business functions, such as human resources and finance.
