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

2.3.3 - What is quality?

Answer 17

Achieving a minimum standard for a product or service, or a production process, which meets customers’ needs.

Question 18

2.3.3 - What is quality control?

Answer 18

Taking a small sample of finished products and testing if they meet the standards required

Question 19

2.3.3 - What is quality assurance?

Answer 19

Ensuring that quality is produced and delivered at every stage of the production process, often through making quality the responsibility of every worker.

Question 20

2.3.3 - Why may a business prefer quality control/assurance over each other?

Answer 20

• Quality control is less expensive as you don’t have to check every single process
• Quality assurance makes sure irreversible mistakes are minimized (Once a mistake has been made, quality control can’t fix it)

Question 21

2.3.3 - In short, what is the difference between Quality control/assurance?

Answer 21

Quality control is about checking products at the end and assurance is about throughout

Question 22

2.3.3 - Why does a higher quality give a business a competitive advantage?

Answer 22

• Differentiated products
• Meeting customer needs
• Building a strong brand
• Premium prices can be charged

Question 23

2.3.4 - What is the sales process?

Answer 23

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

Question 24

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

Answer 24

• 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 25

2.3.4 - What is customer engagement?

Answer 25

• 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 26

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

Answer 26

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 27

2.3.4 - What is post-sales service?

Answer 27

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