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The Value of Business Mathematics – Definition of Terms

The Value of Business Mathematics – Definition of Terms

Market Penetration

Market penetration is the extent to which customers use a service or product compared to the aggregate estimated market for the service or product. Understanding a business or organization’s market penetration is vital in determining the success of a product or service in the market and predicting any changes in market share (Blokdyk, 2018). Therefore, I will use the information on market share to determine the feasibility of doing business in a certain location based on whether the existing market share generates the required profits.


Markdowns are the reductions in the original price of a product to increase sales. I will use the information on the markdown of similar products and services in the market to determine whether the product will create long-term profits. I can then design measures to increase the value of the products and services to prevent price reductions. Some of the measures could include product or service differentiation, increasing the quality of the products and services, and price adjustments.


Sell-thru is the percentage or amount of a product distributed in the market relative to the aggregate amount of products in storage. I will use the information on the changes in the sell-thru to evaluate the organization’s success and adjust manufacturing to maintain the flow of products in the supply chain. A high sell-thru will indicate a need for continuous manufacturing to maintain a constant supply.

Turnover Rate

The turnover rate refers to the percentage of employees exiting a company’s workforce over a certain period. I will use the information on the turnover rate to predict future needs in human resources in the organization. The information will also be used to determine whether employees are happy in the workplace. According to Yee (2012), an increase in turnover rate will indicate less employee contentment and a reduction will indicate high contentment levels.

Inventory Shrinkage

Inventory shrinkage is the extra inventory listed in accounting records but is not in the actual inventory (Smith, 2016). I will use inventory shrinkage information to track inventory flow in the organization and ensure there is enough inventory to run the organization.


Blokdyk, G. (2018). Market penetration a complete guide. 5starcooks.

Smith, A. D. (2016). Inventory shrinkage and corrective RFID and management strategies. Encyclopedia of E-Commerce Development, Implementation, and Management, 1825-1840.

Yee, C. K. (2012). Relationship Between job satisfaction and employee’s turnover rate of quantity surveying in consultant firms.


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Definition of Terms

Definition of Terms


1- Market Penetration

2- Markdowns

3- Sell-thru

4- Turnover Rate

5- Inventory Shrinkage

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