Continuous improvement is the process by which organizations frequently review their procedures, aiming to correct errors or problems. The most effective process improvements have the power to increase quality and productivity while simultaneously cutting costs. Process Improvement is essential for business in this day of competition, market rivalry, and a global economy.

Process improvement is important as Rummler & Brache's research (1995) showed that process account for about 80% of all problems while people account for the remaining 20%.

CPI has been described using a number of models CPI has been described using a number of models. This manual will use the system approach or ADDIE (Analysis, Design, Development, Implement, Evaluate) model. There are five phases in this model: Analysis Phase — Identify areas of opportunity and target specific problems. Design Phase — Generate solutions , identify the required resources to implement the chosen solution and identify baselines to measure.

Example : Some of the things that can be measured are: -Customer satisfaction -Product or service quality - Percent of late deliveries -Number of errors -Number of minutes per order -Cost per order -Quantity produced -Percent of time devoted to rework -Number of people or resources involved in a process

Development Phase — Formulate a detailed procedure for implementing the approved solution. Implementation Phase — Execute the solution. Evaluation Phase —Evaluations are used to measure the success or failure of a change . Please note that this phase is performed throughout the entire process.

A win-win situation : also called a win-win game or non-zero-sum game in game theory, is a situation by which cooperation, compromise, or group participation leads to all participants benefiting ( in a win – win situation both people win a roughly equivalent amount ) . The term can be applied to many aspects of daily living, and it is contrasted to the zero-sum game or win-lose situation, where the dominant factor is that at least one person wins while another loses. The win-win situation is different, since its total according to game theory could be two or more.

Any situation where parties agree to act in both their own interest and in the interest of the group can be a win-win situation. In economy, this may also be referred to as the Equilibrium ( when the quantity demanded equal the quantity supplied), also the economic integration is a good example of a win-win situation. .

It’s hard to create win-win situations when people are selfish and egotistical, and especially if they don’t care whether their personal gains result in someone else’s losses.

In microeconomics and macroeconomics , a production function indicates, in mathematical or graphical form, what outputs can be obtained from various amounts and combinations of factor inputs. In particular it shows the maximum possible amount of output that can be produced per unit of time with all combinations of factor inputs, given current factor endowments and the state of available technology. Unique production functions can be constructed for every production technology.

Alternatively, a production function can be defined as the specification of the minimum input requirements needed to produce designated quantities of output, given available technology. Almost all economic theories presuppose a production function, either on the firm level or the aggregate level.

The primary purpose of the production function is to address allocative efficiency in the use of factor inputs in production and the resulting distribution of income to those factors. Under certain assumptions, the production function can be used to derive a marginal product for each factor, which implies an ideal division of the income generated from output into an income due to each input factor of production.

To simplify the interpretation of a production function, it is common to divide its range into 3 stages. In Stage 1 (from the origin to point B) the variable input is being used with increasing output per unit, the latter reaching a maximum at point B (since the average physical product is at its maximum at that point). Because the output per unit of the variable input is improving . In Stage 2, output increases at a decreasing rate, and the average and marginal physical product are declining.

In Stage 3, too much variable input is being used relative to the available fixed inputs: variable inputs are over-utilized in the sense that their presence on the margin obstructs the production process rather than enhancing it. The output per unit of both the fixed and the variable input declines throughout this stage.

Economies of scale :refer to economic efficiencies that result from carrying out a process (such as production or sales) on a larger and larger scale. The resulting economic efficiencies are usually measured in terms of the unit costs incurred as the volume of the relevant operation increases. "Scale economies can be present in nearly every function of a business, including manufacturing, purchasing, research and development, marketing, service network, sales force utilization, and distribution," الكفاءة الإقتصادية الناتجة عادة ما تقاس فى حدود تكاليف الوحدة المستهدفة ، الناتجة عن الزيادة فى حجم العملية المنظورة .

Many small business operations are of insufficient size to utilize economies of scale to major strategic advantage . In competitive terms , small businesses often find that economies of scale are most visible as a weapon utilized by their larger competitors as a barrier to market entry.

The operating economy of scale, is based on the idea that "for any given facility size, there is an optimal operating level that minimizes the cost per unit .

The benefits of producing on a large scale : As the volume of production increases, the cost per unit article decreases , since fixed costs are shared over an increased number of goods . It is suggested that, after a certain volume of production, this fall in cost will be halted as diseconomies arise, but this will happen only at very high levels of production .