Definition:
Mean time between failure (MTBF) refers to the average amount of time that a device or product functions before failing. This unit of measurement includes only operational time between failures and does not include repair times, assuming the item is repaired and begins functioning again. MTBF figures are often used to project how likely a single unit is to fail within a certain period of time.
Further Reading:
Book: Playing to win by A. G. Lafley and Roger L. Martin
Definition:
A sunk cost is a cost that an entity has incurred, and which it can no longer recover. Sunk costs should not be considered when making the decision to continue investing in an ongoing project, since these costs cannot be recovered. Instead, only relevant costs should be considered. However, many managers continue investing in projects because of the sheer size of the amounts already invested in prior periods. They do not want to “lose the investment” by curtailing a project that is proving to not be profitable, so they continue pouring more cash into it. Rationally, they should consider earlier investments to be sunk costs, and therefore exclude them from consideration when deciding whether to continue with further investments.
Further Reading:
Book: Playing to win by A. G. Lafley and Roger L. Martin
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