2.3 - Making operational desicions

Question 1

2.3.1 - What are the three different types of production?

Answer 1

• Job
• Batch
• Flow

Question 2

2.3.1 - Describe what job production is giving pros and cons.

Answer 2

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

Question 3

2.3.1 - Describe what batch production is giving pros and cons.

Answer 3

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

Question 4

2.3.1 - Describe what flow production is giving pros and cons.

Answer 4

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

Question 5

2.3.1 - Define productivity (with formula).

Answer 5

Productivity is output per worker. It measures how much each worker produces over a period of time:

Productivity = Total output ÷ number of workers

Question 6

2.3.1 - How does technology affect costs?

Answer 6

• 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

Question 7

2.3.1 - How does technology affect quality?

Answer 7

• 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

Question 8

2.3.1 - How does technology affect flexibility?

Answer 8

• 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

Question 9

2.3.1 - How does technology affect productivity?

Answer 9

• 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

Question 10

2.3.2 - What is stock?

Answer 10

Materials that a business holds.

Question 11

2.3.2 - Describe the features of a bar-stock graph

Answer 11

• The highest each peak reaches is the maximum stock after a delivery arrives.
• The horizontal line in the middle is the point at which the business will contact suppliers in order to get more stock before they run out
• The dashed line at the bottom shows the buffer stock

Question 12

2.3.2 - What is buffer stock and why is it needed?

Answer 12

• 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

Question 13

2.3.2 - What is JIT strategy?

Answer 13

• 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.

Question 14

2.3.2 - Why is it essential that business using JIT have a good relationship with their suppliers?

Answer 14

• 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

Question 15

2.3.2 - What are the pros and cons of JIT?

Answer 15

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

Question 16

2.3.2 - What four things are necessary to consider when choosing a supplier?

Answer 16

• 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

Question 17

2.3.4 - What is the sales process?

Answer 17

• Product knowledge
• Speed and efficiency of service
• Customer engagement
• Responses to customer feedback
• Post-sales service

Question 18

2.3.4 - What is the importance of product knowledge in the sales process?

Answer 18

• Understanding the products’ features allows the sales person to present their benefits accurately and persuasively.
• Customers respond to enthusiastic sales staff who are passionate about their products and eager to share the benefits with them

Question 19

2.3.4 - What is customer engagement?

Answer 19

• Customer engagement (CE) is an effect, a reaction, a connection, a response and/or an experience of customers with one another, with a company or a brand.
• This can be either consumer- or company-led and can be on or offline.

Question 20

2.3.4 - What is the importance of responding to customer feedback in the sales process?

Answer 20

All customer feedback is important to a business – positive or negative as it will help them to provide a better product or service in the future

Question 21

2.3.4 - What is post-sales service?

Answer 21

Various processes which make sure customers are satisfied with the products and services of the business. (e.g. Repair, Maintenance, Warranty)