Glossary

Weighs the costs associated with a decision against the benefits arising from that decision. Often used to decide whether to proceed with a course of action or not.

A business unit within an organization that does not generate profit but still costs money to operate.

In accounting, an event (one or more) that triggers a change in the cost of an activity such as the consumption of a resource, or that influences quality or cycle time.

In accounting, the review and explanation of the effects of cost drivers. Often used to improve quality, throughput, and reduce cost.

In accounting, the cost of a resource that is consumed by an activity. The concept is used in activity-based costing.

Seller is responsible for the cost, the marine insurance, and the freight charges on an ocean shipment of goods to the destination port. An Incoterm abbreviated CIF.

The control of actual or forecasted costs incurred by a business. Includes collecting information, reviewing, reporting, controlling, and monitoring costs.

The minimum return that would be necessary in order to justify undertaking a capital budgeting project. Includes the weighted cost of both equity and debt.

The total costs used to create a product or service, which has been sold. Includes direct labor, materials, and overhead. Excludes indirect costs such as marketing.

The missed profits companies associate with stockouts.

The interrelationship between variables where a change in one affects the costs of other variables. A reduced cost in one variable may increase costs in another.

The difference between the cost actually incurred and the budgeted or planned amount of cost that should have been incurred.

See Complete and On-Time Delivery (COTD).

Professional organization with a mission to connect, educate, and develop the world’s supply chain management professionals throughout their careers.

A barter type of transaction between two or more parties in which goods or services are traded for other goods or services, instead of for money.

Tariffs or other duties that a government levies on imported goods to offset subsidies provided to the exporters of those goods.

The final destination for goods. Identifies the country of the customer or receiver of the goods.

The country where the goods were manufactured and first shipped from.

Door-to-door pickup and delivery service for goods (under 50 lbs.) or documents. Often time-sensitive and used for valuable items. It can be local or international.

The purchasing credit a customer has available to use.

The agreement between businesses regarding the amount and timing of payment for goods or services. Includes payment methods and due dates.

Something that makes an idea, product, service, or business model unique with the aim of providing a competitive advantage.

An activity and/or process that must be successfully completed and/or controlled to enable a company to reach its goals.

A modified ABC analysis where a subjective critical value is assigned to each inventory item.

See Customer Relationship Management (CRM).