The period during which the objects of labor (raw products and
materials) remain in the production process, from the beginning of
manufacturing through the output of a finished product. In addition to the
working time, the production cycle includes interruptions in production owing
to physical, chemical, and biological (natural) processes (for example, the
period required for tanning leather); the character of the objects of labor; or
the technology and organization of production.
An operating cycle is the length of time between the acquisition of
inventory and the sale of that inventory and subsequent generation of a
profit. The shorter it is, the faster a business gets a return on investment
(ROI) for the inventory it stocks. As a general rule, companies want to keep
their operating cycles short for a number of reasons, but in certain
industries, a long one is actually the norm. These cycles are not tied to
accounting periods, but are rather calculated in terms of how long goods sit in
inventory before sale.
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