2.3- Making operational decisions Flashcards
What is the purpose of business operations?
To produce a good/ service to customers
3 types of production processses
Job, batch, flow
Job production
Def?
2 Ads & dis?
One product is made at a time and is specific to the customer
Ads- Customer satisfaction from bespoke product, charge premium prices
Dis- Skilled experts have higher wages, could require expensive, specialised tools
Batch production
Def?
2 Ads & dis?
Set quantity of identical products
Ads- Can meet fluctuations in demand, less labour intensive than ‘job production’
Dis- Wasted idle time between batches, not bespoke to customer tastes
Flow production
Def?
2 Ads & dis?
Continuously making identical products
Ads- Make larger quantities and buy in bulk, consistent quality so less wastage
Dis- Expensive machinery, higher absenteeism due to repetitive work
Productivity
Output per workers, how much each worker produces in a time period
3 ways a business can improve productivity
-Recruit correct staff
-Motivate staff financially and non-financially
-Invest in up-to-date machinery
Technology in production
Ads & dis?
Ads- Production is faster, reduced defects
Dis- High start up costs, requires trained employees to use tech
Procurement
The process of buying and sourcing stock
Logistics
The management of transporting and storing stock
3 attributes of a good supplier? / 3 ads of having a good relationship w supplier?
-Reliable deliveries, helps business ensure they have products
-Short lead times, meet changes in demand
-High quality for reasonable prices
3 disadvantages of high stock levels?
-Stock could go out of date
-High costs to store the stock
-Reduced revenue if need to sell excess stock at reduced prices
2 disadvantages of low stock levels?
-Unavailable products cause customers to visit competitors
-Can’t take advantage of surges in demand
Just in time (JIT) meaning?
Stock is only delivered when needed in the production system
Just in case (JIC) meaning?
Stock is kept by the business to reduce risk of running out of stock
JIT
Ads & Dis?
Ads- Fresh stock/ less perished goods, cash not tied up in stock which could go out of trend
Dis- Unable to use bulk-buy discounts, can be hard to respond to sudden surges in demand
JIC
Ads & Dis?
Ads- Can meet surges in demand, use bulk-buy discounts
Dis- High storage costs, stock can perish/ go out of trend
3 ads of good quality products?
-Charge premium prices
-Less refunds due to insatisfactory quality
-Gives competitive advantage
3 ways to tell the quality of a product?
-Number of customer complaints
-Customer surveys
-Customers’ loyalty
Quality assurance meaning?
Product inspection at each stage of production, aim to prevent defects
Quality control meaning?
Product inspection at end of production, aim to remove defect items
Quality assurance
Ads & Dis?
Ads- Less wastage so reduced costs, increased staff motivation to create satisfactory product, as their stage is checked
Dis- Adds extra time to production, high training costs for more employees
Quality control
Ads & Dis?
Ads- Quicker production process, only requires one expert’s wages
Dis- Wasteful so increased costs, less staff responsibility
Customer service def?
Methods used by a business to look after its current and future customers
5 stages of the sales process
- Product knowledge
- Speed of service
- Customer engagement
- Responses to customer feedback
- Post-sales service
3 Ads of good customer service?
-Lower costs, fewer refunds/complaints
-Customer retention
-Word of mouth promotion
3 dis of bad customer service
-Higher costs, more refunds/complaints
-Loss of customer loyalty
-Customers spread bad experiences
