rule of thumb


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Related to rule of thumb: Rule of thirds

rule of thumb

an aid to decision-making involving the use of conventions or mechanistic formulas to determine prices, production schedules, advertising budgets etc. Rules of thumb are used as rough guides or approximations when, because of uncertainty, it is impossible to determine optimal solutions. Many firms, for example, use cost-based formulas to set prices, adding a conventional unit profit mark-up to costs, in the absence of totally reliable information about demand. Similarly, firms often set the value of their advertising budget as a fixed percentage of their sales revenue. See COST-BASED PRICING, UNCERTAINTY AND RISK.

rule of thumb

a rough-and-ready decisionmaking aid that provides an acceptably accurate approximate solution to a problem. Where refined decision-making processes are expensive in terms of information-gathering and information-processing, then rules of thumb may be justified. For example, COST-PLUS PRICING may be used in practice by firms in the absence of sufficient knowledge about future demand and cost conditions to permit marginal weighting of revenues and costs to achieve an optimum decision. See RISK AND UNCERTAINTY.
References in periodicals archive ?
Neither rule of thumb mentioned above (and few I ever hear of) addresses the terms of sale.
Almost all newspapers are also spending on the high end of the rule of thumb that says employee expenses should account for 76% to 80% of newsroom expenses.
982 in Equation 8 to allow the development of a simple, approximate rule of thumb for direct comparison with 3/[t.
Another rule of thumb is that the total quantity determined in the AFS 25 micron clay wash should be 1.
As a rule of thumb, the best time to transplant any tree is during its dormant season, the winter months.
The traditional rule of thumb indicates a firm that was substantially a compliance practice (tax preparation, write-up and compilations) would be valued at .
Appellate courts are loath to say a trial court has abused its discretion, so the rule of thumb basically means that in these matters appellate courts should defer to trial courts, which are closer to the evidence and the situation than appellate courts.
In the event your library card was remanded or your local bookstore still subscribes to that wayward idea that "black people don't read or write rule of thumb," here are chapters and passages excerpted from books you always intended to get to but never did, like Walter Mosley's RL's Dream, Shay Youngblood's Black Girl in Paris, Steven Barnes' Lion's Blood, What You Owe Me by Bebe Moore Campbell and Slapboxing With Jesus by Victor D.
The last rule of thumb is that growth will cost you in the short term.
Gartner's rule of thumb for intellectual capital is: If the market value of a company is dependent on its intellectual capital, then at least as much senior executive attention should be placed on managing intellectual assets, especially the human capital component, as on physical and financial assets.
Francis: The rule of thumb is unrefined, unprocessed foods, low fat, no sugar, and avoiding stimulants like caffeine.