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Janie is a 3-month-old infant participating in an experiment. She's lying in her crib with one end of a ribbon tied to her foot and the other end tied to a mobile dangling over her crib. She quickly learns that she controls the movement of the mobile with her kicking. One week later, the researchers return, tie the ribbon to her foot, and hang the mobile above her crib. Immediately, Janie starts vigorously kicking her leg. What does this experiment demonstrate?
Fixed Costs
Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance premiums.
Variable Cost
Costs that vary directly with the level of production or sales volume, such as materials and labor.
Theory of Constraints
A management approach that focuses on identifying and managing the most limiting factor (constraint) that stands in the way of achieving a goal.
Goldratt and Cox
Eliyahu M. Goldratt and Jeff Cox, co-authors of "The Goal," a book introducing the Theory of Constraints, a methodology for improving organizational performance.
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