2.3 Making operational decisions Flashcards
Describe what job production is giving pros and cons.
Producing a one-off item for a one-off customer.
PROS:
Bespoke, to customers measurements or specifications e.g. a kitchen
Very motivated workers as they see the product from start to finish
This usually increases productivity and reduces rates of absenteeism
Higher prices can be charged to the customers
CONS:
Skilled labour and craftsmen are expensive
Wide range of tools may be required.
Describe what batch production is giving pros and cons.
Producing a set number of identical items (e.g 500 pairs of size 11 boots for British armed forces)
PROS:
Flexibility as production can be changed to meet customer needs or fluctuations in demand
Standard production of items means it can be mechanised
Less labour involved than job production
Employees specialise so become good at their job
CONS:
Workers may be less motivated with repetitive work
Idle time between batches needs to be managed as this is wastage because work stops while the machines are changed to make the next product
If one batch takes too long the other batches will all be held up too
Describe what flow production is giving pros and cons.
Production of a single item, such as cans of Heinz Baked Beans.
PROS:
Economies of scale
Automated/computerised production means improved quality and more complex designs in shorter times
As production is continuous stocks of parts and raw materials don’t need to be held businesses can use JIT
CONS:
High costs to buy the factory and machinery
Low motivation of staff due to repetitive tasks
Break downs and lost production can be costly
Very inflexible, hard to change the factory machinery to make different products, the production process will be set up to make just one item e.g. bottled cola
Define productivity (with formula).
Productivity is output per worker. It measures how much each worker produces over a period of time:
Productivity = Total output ÷ number of workers
How does technology affect costs?
Initial costs of buying new machinery or robots will be expensive
Soon these costs will be made back with the improvement in quality and reduction of wastage
Robots don’t need to be paid so the savings on wages will soon build up
How does technology affect quality?
Design used to be on paper now with CAD (computer aided design) designs can be completed on the computer and seen in 3D
Machinery and robots ensure there is no human error in production
How does technology affect flexibility?
Using CAM (computer aided manufacture) allows you to use computers to monitor and adjust tools in manufacturing Also a business producing products can be more flexible and produce a wide variety of products
How does technology affect productivity?
Robots and machines can work 24/7
They do not need breaks, lunch hours, time off or holidays
This will increase the productivity of a business producing products
Productivity is output per hour
What is buffer stock and why is it needed?
Buffer stock is the amount of stock permanently kept in storage at a level.
It is needed in order to ensure that if supplies don’t arrive in time, the business will still be able to function and they have back-up stock to depend on
What is JIT strategy?
Just-in-time means that a business does not keep stocks of parts in a warehouse.
Instead they order the parts and get them delivered same day from the supplier.
Why is it essential that business using JIT have a good relationship with their suppliers?
JIT does not work when there are delivery or quality issues.
No buffer stocks are held in a JIT system so if delivery does not arrive the product cannot be made
What are the pros and cons of JIT?
PROS:
As parts are ordered as they are needed there is no wastage
Massive cost saving in terms of premises and staff (no warehouses)
Stock is less likely to go out of date
The business will improve their cash flow, as their money is not tied up in stock
CONS:
The business can’t meet unpredictable surges in demand
The business can’t quickly replace damaged parts
If the delivery does not turn up in time this can stop the whole production line, which is costly
What four things are necessary to consider when choosing a supplier?
Quality: Supplies of good quality can create better products
Delivery: Can reduces risk of running out of stock
Availability: Means stock can be replenished easily
Trust: More reliable and likely to be on time
These decisions can also be made based on:
Customer satisfaction, Reputation, Costs
