2.4 Lean Production Quality and Stock - Key Words

Question 1

Lean Production

Answer 1

production methodology focused on eliminating waste

Kaizen (continuous improvement)
Kanban
Cell Production
Just in Time (JIT)
Andon
Total Quality Management

Question 2

Kanban

Answer 2

a visual system used to manage and keep track of work as it moves through a process - Japanese word

Question 3

Cell Production

Answer 3

a form of mass production that divides work into teams known as cells

Question 4

Just-in-Time (JIT)

Answer 4

an inventory management method in which goods are received from suppliers only as they are needed

Question 5

Andon

Answer 5

a visual control that indicates the status of a machine, manufacturing line or work process - Japanese word

e.g.
everyday example of an andon is the warning light on your car’s dashboard that indicates when the gas tank is getting close to empty

Question 6

Total Quality Management (TQM)

Answer 6

a management framework based on the belief that an organization can build long-term success by having all its members, from low-level workers to its highest ranking executives, focus on improving quality and, thus, delivering customer satisfaction

Question 7

Methods of Quality Management

Answer 7

Quality Control
Quality Assurance:
-Quality Standards
Quality Improvement:
-Total quality management
-Quality circles
-Benchmarking

Question 8

Buffer Stocks

Answer 8

are additional quantities of stock kept by a company in case of need

Question 9

Just-in-Case (JIC)

Answer 9

Just-in-case stock control involves holding relatively large levels of buffer stocks so that a business can continue to operate when faced with an unforeseen event

Question 10

Maximum Stock Level

Answer 10

the total amount of inventory a firm wishes to hold, using current storage facilities

Question 11

Buffer stock level

Answer 11

stock that is held just in case there is an unexpected order or late delivery. Buffer stock is a backup so that customers’ needs can still be met if something unforeseen occurs

Question 12

Lead time

Answer 12

how long it takes a supplier to fulfil an order; the difference between when an order is placed and when it is delivered

Question 13

Re-order Level

Answer 13

the point when new stock is ordered from a supplier. This will take into account the lead time and buffer stock level

Question 14

Re-order quantity

Answer 14

the amount of stock that is ordered from a supplier

Question 15

JIT Pros

Answer 15

-reduced stock holding improves cash flow

-encourages staff to be more careful; with no additional stock staff know they need to get things right the first time

-positive benefits for stock-holding costs. with less warehouse space needed and with less chance of waste and damage, costs are reduced

-with less stock holding, there may be more space available for production, which could increase capacity

Question 16

JIT Cons

Answer 16

-purchasing economies of scale may be lost because order sizes are reduced, leading to higher costs

-there are high risks. production may halt if a small part of the supply chain breaks down. any delay in delivery becomes critical for production e.g. KFC highway crash

-restricts a firm’s ability to react to significant unexpected orders

-it may not be suitable for businesses with seasonal demand

Question 17

JIC Pros

Answer 17

-production can continue if the supply chain is disrupted

-larger orders should lead to purchasing economies of scale reducing average costs

-unexpected orders can be fulfilled quickly

Question 18

JIC Cons

Answer 18

-Storage costs are higher

-There is an increased risk of wastage

-Working capital is tied up in stocks, which reduced liquidity