Input-Output Analysis

Think: Cologuard. Well, that's for the output analysis, anyway.

I/O Analysis covers various factors in managing a business. "If we add 20% labor time, paying overtime at time-and-a-half, then what happens to production volume?" "And if we make that input change of labor, do we end up more profitable? Less profitable? The same?"

In manufacturing companies, particularly in industries that are highly competitive, tons of tiny little changes upstream, i.e. at the input level, have massive impact on the bottom line.

Save just 10 basis points in expense margin, and a company can become the low-cost scale provider, and drive everyone else out of business; make a wrong input decision and that company is bankrupt 2 years later. Vicious competition has forced companies to run sophisticated linear regression analyses on their various factors of production to optimize whatever it is they're trying to optimize: revenues (to gain market share), or profits (to make shorter term investors happy), or some other element, like international market share to open new venues into which they sell their oh so lifelike bobbleheads.