2.3 Making operational decisions Flashcards
What is meant by operations?
Operations is the business function that organises, produces and delivers the goods produced by a business.
What are the 4 issues the business has to organise during the production process.
- Productivity-the effectiveness in which the business produces its goods.
- Efficiency: how well it limits the amount of waste produced
- Flexibility- Being adaptable and able to change products to meet customer needs.
- Quality-How well it does its job
Job Production, features.
- high skilled workforce demands higher wages
- low automation
- one-off bespoke items unable to achieve economies of scale.
- high profit margins
-highly flexible so customers can be consulted about their requirements–> positive relationship.
Batch production, features.
- large volume of products through automation.
- downtime between batches
- allows flexibility as the business can change the ingredients.
- difficult to anticipate demand.
Flow production.
- standardised products produced on a large scale through a system.
- high automation
- benefit from economies of scale
- low skilled workers-less wages
- cost of machinery is high.
The impact of technology on operations.
- Higher productivity as it speeds up the process.
- Computer aided design used for cars reduces costs
- keeps business in touch with customers
- Improves quality
- Improving flexibility- able to adjust products more easily.
Dis;
- Installation of new tech can cause disruption
- Requires training of employees
- requires maintenance with increases costs
How do you interpret the bar gate stock graphs.
Max stock level is the max stock business can hold
Reorder level is when new stock is ordered.
Min/buffer stock is the lowest amount of stock business can hold.
Lead time is the time b/w new stock being ordered and delivered at the factory
What is procurement
the sourcing and buying of stock
What factors affect a business’ relationship with its supplier.
- The cost of material
- The delivery, its speed, reliability, cost
- quality of material
- the level of trust between the business and supplier
What is meant by logistics.
Logistics is the organisation and transportation of goods.
Why is a positive supplier relationship important for a business?
- Flexible suppliers allows business to meet customer needs more easily, as the business can change orders short notice.
- Securing good contracts with suppliers helps reach economies of scale
Late deliveries can disrupt production levels
- Poor quality can lead to customer dissatisfaction
- reputation at stake
Evaluate the use of JIT.
JIT is when the business chooses only to procure stock when they need it.
- Increases efficiency
- reduces stockholding costs
- able to forecast demand
- If the system fails, business is unable to fulfil customer orders.
Diff b/w Quality Control and Assurance
- Quality controller checks products at the end of the production phase.
- Quality assurance is when products are checked at every stage of the production process.
Benefits of selling good quality products.
Good quality–> premium price
- strong brand image
- meets customer needs–>competitive advantage
- differentiates a product
Evaluate QC AND QA
QA is focused on improving the production process whereas QC is focused on identifying defective products.
QC eliminates problems whereas QA prevents that from happening agains.
QA makes everyone responsible for the quality but QC makes it one person’s responsibility.
