2.3 | Making operational decisions Flashcards
define business operations
the part of the business that provides customers with the goods or services that they ordered.
give two purposes of business operations
- to produce goods
- to provide services.
define each type of production processes
- Job production is when individual products
are uniquely made to meet specific customer preferences. - Batch production involves making a set quantity ( batches )of identical products.
- Flow production involves continuously making identical products. It is heavily automated.
give 2 advantages of job production
- High profit margins for bespoke products due to higher prices being charged
- Employees gain enjoyment from using their specialist skills increasing productivity
give 2 disadvantages of job production
- labour intensive: Highly skilled staff are required increasing costs due to higher wages
- unable to take advantage of economies of scale - unable to buy in bulk - high unit costs
give 2 advantages of batch production
- more efficient than job production thus higher productivity
- can buy in larger quantities thus able to benefit from economies of scale lowering unit costs ( so prices can be lower and thus more competitive)
give 2 disadvantages of batch production
- time is taken between batches lowering productivity
- more expensive due to cost of machinery and tools which may differ for various products
give 3 advantages of flow production
- makes larger quantities leading to economies of scale and lower average unit costs allowing competitive prices
- less labour intensive and higher efficiency
give 3 disadvantages of flow production
- highly capital intensive due to machinery costs
- machinery requires high maintenance
- requires large warehouse spaces for product storage
give 2 ways a business can improve productivity
- Investing in up-to-date machinery
- Providing training to staff to improve their skills
give 4 impacts of technology on costs, productivity, quality, flexibility
costs: initial start up costs however reduces cost in the long term
productivity: machinery increases productivity and allows a business to reduce its prices to remain competitive ( EOS)
quality: automating production allows for consistency and quality control
flexibility: suited to mass production and not for tailored products
give 3 ways ‘ stock’ can be interpreted
- raw materials
- work in progress
- finished stock
what does a bar gate stock graph do?
- it indicates the level of stock that a business is holding at any one time
- it aids with decision making
define maximum stock level
the largest amount of stock a business can store on site.
define the minimum stock level / buffer stock
the lowest amount of stock a business can store on site while still being able to operate effectively
- ( think of it as a backup - if there are delays of high demand then the business can fall back on it )
define lead time
how long it takes from ordering stock for it to arrive
define the reorder level
the point at which a business needs to order new stock in order for it to arrive before its stock falls below the minimum level
what is just in time stock control?
when the business has regular deliveries that bring only what is needed before its existing raw materials run out, so buffer stock is not needed.
give two advantages of just in time stock control
- , having less stock that could go out of date will reduce waste, saving money.
- JIT reduces production costs, allowing businesses to price their products to give a more competitive advantage.
give three disadvantages of just in time stock control
- unable to use bulk buy discounts losing out on economies of scale
- unable to meet unexpected orders or changes in demand
- businesses may run out of stock due to late deliveries
Give the 5 factors that a business should consider when building a relationship with a supplier
- cost
- quality
- delivery
- availability
- trust
why should a business consider cost when choosing a supplier?
- if supplies are cheap, variable costs are kept low, allowing it to maintain higher profit margins.
give 2 reasons why a business should consider quality when choosing a supplier
- quality of supplies must be consistent as if not it may damage customer perception of the business
- good quality means fewer complaints and customer loyalty
give 1 reason why a business should consider delivery when choosing a supplier
- products must arrive on time as late deliveries interrupt the manufacturing process
give 1 reason why a business should consider availability when choosing a supplier
- suppliers must provide stock in sufficient quantities to meet the demand
give 1 reason why a business should consider trust when choosing a supplier
- requires trust to arrange trade credit agreements
define procurement and logistics
procurement: getting the right supplies from the right supplier
logistics: making sure the correct products will arrive when needed
give an impact of logistics and supply decisions on costs, reputation and customer satisfaction
costs: if production is quick then costs are lower
reputation: if products are regular late then it will affect the businesses ability to deliver to its customers on time giving them a bad reputation ( vise versa)
customer satisfaction: logistics allow a business to meet customer need sin a quick and effective manner
give the five stages of the sales process
- having excellent product knowledge
- good customer engagement
- quick and efficient service
- post sales service
- customer loyalty
give 2 reasons why having excellent product knowledge is important
- customers feel more confident about their purchase
- staff can tailor product suggestions based on customers needs and sell additional products
give two ways a business can ensure they have quick and efficient service
- retailers may reduce queue times or introduce self-service checkout
- e-tailers ensure that their website is user friendly nor too complicated nor long to disinterest customers
give two ways a business can engage well with customers
- making customers feel important and valued during the sale
- build a relationship between the customer
what is post sales service and two ways this can be done
- providing support for customers who have bought a product or service
- after sales helpline where customers can make inquires and discuss problems
- teach customers how to use the product
give two ways a business can react to customer feedback
- adapt product based on feedback
- be polite and understanding when responding to customer’s public feedback
give 3 impacts of good customer service
- satisfied customers are more likely to make repeat purchases increasing sales
- helps build a good reputation and positive brand image
- charge premium prices due to a competitive advantage as customer service can be a form of differentiation ( post sales service)
give 3 impacts of poor customer service
- lower market share and sales due to dissatisfied customers
- leads to poor brand image thus less customer loyalty and may even deter to competitors
