2.4 Resource Management Flashcards
What is capacity utilisation?
- A measure of the level to which a businesses assets are being used to produce output
What is the formula for capacity utilisation?
(Current output / maximum output ) x100
What are the implications of under-utilisation?
- Business wont be making the most of their resources
- increased unit costs
- workers may be under-deployed leading to fears of redundancy
- more flexible
What are the implications of over utilisation?
- no flexibility
- staff will be under more pressure
- Higher levels of staff turnover
- Machinery pushed to its limits
- Minimise average total costs
- Increase businesses competitiveness
Ways of improving capacity utilisation?
- Increase sales
- Increase usage
- Outsourcing
- Reduce capacity
- Redeployment
What is buffer stock?
Buffer stocks are a quantity of goods/raw materials kept in case of stock shortages as to provide a competitive edge over rivals unable to meet demand
What are the advantages of buffer stock?
- Stability in supply
- Price stabilisation
- Raw materials security
- Competitive advantage
What are the disadvantages of buffer stock?
- Cost
- Risk of obsolescence
- Opportunity cost
What are the implications of holding too much stock?
- storage costs
- Risk of spoilage
- Opportunity cost
- Unsold stock
- Price reduction
What are the implications of holding too little stock?
- Risk of stock out
- Production stoppages
- Capital and Labour underutilised
- Increases in demand can’t be med
- Loss of potential sales
What is just in time stock (JIT)?
Just in time stock management is a process in which raw materials are not stored onsite by ordered as required and delivered by suppliers just in time for production
What are the advantages of JIT stock?
- Lower costs
- Close relationships with suppliers
- Cash flow is improved
- unused storage space
- Teamwork is encouraged
What are the disadvantages of JIT stock ?
- Bulk buying EoS is not possible
- lower ability to respond to increases in demand
- Administrative costs
- Unreliable suppliers
- Changes to organisational restructure required
What are the ways to minimise waste?
Storage, planning and sales tactics
What is lean production?
Involves the minimisation of the resources used in production
What is quality control?
Inspecting the quality of the output at the end of the production process
What is quality assurance?
Inspecting the quality of production throughout the process
What are quality circles ?
Groups of workers meet regularly to solve quality problems identified in the production process
What is total quality management (TQM)?
Organisation of the business with quality at its core and with every worker responsible for quality
