2.3 Making Operational Decisions Flashcards
What are the 3 main types of production processes?
- Job
- Batch
- Flow
What is job production?
- Production of 1 product at a time
- Requires highly skilled workforce + low levels of automation
- Number of products produced=low
- Every item has a high profit margin( high cost)
Benefits of job production
- Highly flexible
- Product meets customer needs and wants
- Builds positive relation with customers
Disadvantages of job production
- Requires highly trained employees
- Highly skilled employees demand higher wages
- Cost of material is higher
- one-off bespoke production
What is batch production?
- Produce products relatively large production runs
- Uses some automation
- Allows business to be more flexible + vary products being produced
Advantages of batch production
- Allows business to be flexible
- Allows business to get benefit of reduced costs through production of a larger scale
Disadvantages of batch production
- There is downtime between batches, business rate of production falls
- Difficult to anticipate demand
- Can produce wastage from overproducing
What is flow production?
- Takes place when a standardised product is produced on a large scale
- Uses a lot of automation
- Usually only one product is made
Advantages of flow production
- Sold in large quantities
- Lowers costs of raw materials
- Can get benefit of economies of sale
Disadvantages of flow production
- Initial cost of machinery + robots is high
- Requires high maintenance from skilled workers
What is the impact of technology on a business?
Using computers allows businesses to lower their cost per unit, while increasing their productivity, efficiency and quality of products
What equipment is used to reduce costs for production?
CAM
How can techno,ohh help improve productivity?
- Businesses use supply chain management (SCM)
- SCM helps coordinate delivery of materials on time
- Helps prevent too much waste
How can technology help improve quality of products?
- Help improve customer services
- Better connection with customers
- Tracks location of products
How can technology help improve flexibility of a product?
- Can change the quantity of product being made
- Can change characteristics of product
What are the disadvantages of technology on a business?
- Resistance to change
- Fewer jobs= high level of unemployment
- Highly skilled workers to operate machine
- Cost of maintenance is high
What happens If a supplier fails to provide a business with the right quantity of raw materials?
- Staff can’t complete orders
- Limited choice/ no products at all
- Loss of customers
- A poor reputation
What is procurement?
The process of managing a business’s major purchases
What factors contribute to a businesses relationship with it’s suppliers?
- Cost of materials made
- Delivery provided by supplier
- Quality of raw materials
- Availability of materials
- Level of trust
What is logistics?
The organisation and management within a business of the transport of raw materials and goods
What does perishable mean?
Likely to go out of date or go off quickly
What are the 2 ways a business can manage it’s stock?
- Bar gate stock graphs
- Just in time stock control
What is a bar gate stock graph?
Indicates level of stock that a business is holding at any one time
What 4 pieces of info does a bar gate stock graph show?
- The maximum stock level
- The minimum stock level
- The level of stock at which a business should order more stock
- The lead time
What is the maximum/minimum stock level?
- The maximum amount of stock a business can hold in it’s warehouse/ shop etc
- Minimum= smallest amount of stock a business can hold without running out of stock
What is the re-order level?
The point at which a business orders more of that product
What is lead time?
The length of the ice new stock is being ordered and it’s delivery at the factory or shop. It help manage stocks, large lead time is bad
What is just in time stock control?
When a business procures stick only when they need it
Advantages of JIT
- Helps improve efficiency+ decrease waste
- Business has more cash available for other costs
Disadvantages of JIT
- Business must be able to forecast customer demand
- Could lead to unhappy customers
