2.3 - Making operational desicions Flashcards
2.3.1 - Business operations 2.3.2 - Working with suppliers 2.3.3 - Managing quality 2.3.4 - The sales process
What is the role of the operations department?
The function of a business that produces and delivers the goods and services produced or provided by a business.
What are the three different types of stock?
Raw materials: these are the items ordered from suppliers before they are transformed into another component. Eg the tyres and metal needed for an aeroplane.
Semi finished goods (or work in progress): These are goods which are part way through the production process, but not yet finished. Eg the landing gear of an aeroplane.
Finished goods: The goods that are completed and ready for sale. Eg the aeroplane.
What are the three different types of production?
- Job
- Batch
- Flow
Describe job production and explain the benefits and drawbacks of this method.
Job production: Producing a one-off/bespoke item for a customer. Example; wedding dresses, house extension
Benefits
+ 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 and therefore results in higher profit margins
Drawbacks
- Skilled labour and craftsmen are more epensive than non skilled workers
- Wide range of tools/equipment may be required
- Often unable to benefit from economies of scale
- Longer production processes so products can take time to produce
Describe batch production and explain the benefits and drawbacks of this method.
Batch production: Producing a set number of identical items, the re-organising to produce a different set of goods. e.g 500 pairs of red size 8 shoes in a specific design, then re-organising the equipment/machinery to produce a different size.
Benefits
+ Some flexibility as production can be changed to meet customer needs or fluctuations in demand
+ Standard production of items means it can be mechanised, which means less labour involved than job production and more efficient
+ Employees specialise so become good at their job, which means they can be more efficient
+ Semi-skilled workers required, so labour costs will be lower than that of job production
Drawbacks
- 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
- Semi-skilled workers required, so labour costs will be higher than that of flow production
Describe flow production and explain the benefits and drawbacks of this method.
Flow production: Production of an identical single item on a large scale, such as cans of Heinz Baked Beans.
Benefits
+ 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, so businesses can use JIT
+ High volumes can be produced quickly, so high levels of efficiency and lower unit costs
+ Low skilled workforce required so lower labour costs than other methods of production
Drawbacks
- 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
What are the factors that will affect the use of technology within a business?
- Productivity- how will productivity be impacted?
- Flexibility- will the technology enable the business to maintain flexibility in terms of customisation
- Cost of the technology, average rate of return?
- Quality- if the process becomes automated how will quality be impacted for example?
Define productivity and explain how it is calculated.
Productivity is the output per worker. It measures how much each worker produces over a period of time: Productivity = Total output (number produced) ÷ number of workers.
Explain how CAD & CAM can be used in business.
- Computer aided design: the use of computers to help in the design of a product.
- Computer aided manufacturing: uses computer software to automate the production process.
Explain how EPoS can be used in business.
EPOS stands for Electronic Point of Sale and is a computerised system used in shops, restaurants and other retail outlets. Essentially it’s an electronic way of letting people pay for goods or services.
Explain how 3D printing can be used in business.
- Making prototypes
- Creating custom made products
- Creating spare parts where an item is no longer available widely, eg spare parts for older cars
- Create templates for designs, eg cake moulds
Explain the positive and negative impacts of technology on operations.
Positive impacts
+ Speeds up the production process (CAD/CAM) and therefore lowers unit costs, reduces mistakes and defects as computer precision is achieved.
+ Keeps businesses in touch with customers (GPS) and improve customer satsifaction levels
Negative impacts
- Can involve a costly investment in the short term
- Technology can become obsolete, or neds constant updating
- Requires employees training to be updated
What are the factors that will affect the chosen method of production?
- The nature of the product
- The target markets- do they need customisation or is value for money more important?
- The production facilities and capacity of the company
What is the purpose of a bar gate stock graph? What are the key features?
Managing stock is about managing the materials that the business needs in the most effective way. This canbe represented in a bar gate stock graph which shows the following:
- 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- this is known as the re-order level
- The line at the bottom shows the buffer stock, which is also known as the minimum stock level.
- The time between the stock order and the delivery is known as the lead time.
Describe the two main methods of stock control?
JIT- Just in time, no minimum stock level is held, stock is delivered only when it is needed
JIC- Just in case, where the business holds a buffer level of stock.