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AQA A Level Business > 3.4 Decision making to improve operational performance > Flashcards

3.4 Decision making to improve operational performance Flashcards

1
Q

What is the operations function of a business?

A

The operations function is the business ‘engine room’, how it operates

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2
Q

Why does a business set operational objectives? What are some values of doing so?

A

In order to monitor its performance and improve.
-Focus for decision making
-Motivating employees
-Provides a benchmark against which success or failure can be measured
-To improve efficiency by examining reasons for failure

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3
Q

What are the key operational objective areas?

A

-Cost and volume targets
-Quality targets
-Efficiency and flexibility targets
-Enviromental targets

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4
Q

What are some internal and external influences on operational objectives?

A

Internal:
-Coorpoate objectives
-Finance
-Human resources (skills of workers)

External:
-Available resources from suppliers
-State of the economy, consumer confidence
-Competitor actions

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5
Q

What is capacity?

A

The maximum output a business can produce in a period of time given a set amount of resources.

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6
Q

What is capacity utilisation?

A

The % of total capacity that is being achieved in a given period of time

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7
Q

What is labour productivity? How is it calculated?

A

The measure of output per worker in a given period of time.

output per period of time / number of employees at work = Avg. Labour Productivity

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8
Q

How can labour productivity be increased? Are there any downisdes to doing so?

A

-New technology speeds up production
-Modifying production systems to improve efficiency
-Recruiting higher skilled workers
-Providing better training

Downsides=
-Cost of doing so must be outweighed by increases in revenue
-May conflict with other objectives; may be a loss of quality if too focused on increasing output

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9
Q

What is unit cost?

A

total costs/units of output = Unit cost AKA average cost

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10
Q

What is capital costs?

A

Costs incurred by capital resources I.E; Machinery, vehicles, buildings

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11
Q

What is a labour intesive business?

A

A business whos labour costs outweigh its capital costs

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12
Q

What are some consequences for operating too far below max.capacity?

A

-Business will have resources it is not utilising, increasing unit costs as the firm has fixed costs

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13
Q

What are some consequences for operating too close to max.capacity?

A

-Firm has no flexibility if a big order suddenly comes in
-Firm has less time for maintence and repair
-Firm has less time for training workforce

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14
Q

How may a business increase capacity utilisation?

A

-Marketing starts to increase demand
-Rationalisation = downsizing organisation to reduce max.capacity

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15
Q

How may a business decrease capacity utilisation?

A

-Outsource some operations
-Reduce demand in short term w increased prices and waiting lists
-Expand organisation in long term

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16
Q

What is lean production?

A

A management approach, based on japanese manufacturing companies, that focuses on cutting out waste while mainting quality.

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17
Q

Why is waste bad? What are some examples of waste?

A

Waste = cost
- Over production leading to excess stock
- Waiting time (equiptment and people standing idle)
- Holding excessive amounts of stock
- Defects in output

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18
Q

What are the 4 types of lean production?

A
  • Just In Time
  • Kaizen
  • Cell production
  • Lean design
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19
Q

What is the Just In Time style of production? What are some positives and negatives?

A

Lean production method
-The aim is to organise production so that inputs only arrive when they are needed.

+s =
- Holding lower stock, reduced storage space, saves rent and insurance, lower costs
- Less working capital tied up in stock, benefiting cash flow
- Less likely to have ‘obselete’ inventory = stock perishing

-s =
-Little room for error as minimal stock is kept for redoing faulty products
-Highly reliant on suppliers
-Harder to respond to sudden increases in demand
-Complicated and costly

20
Q

What is ‘Kaizen’ style of production? What are some positives and negatives?

A

It is a lean production method
‘Kaizen’ translates to continuous improvement, in a business context this refers to coninuosly searching for ways to make changes/improvements to the organisation.

Traditional approach to improvement is that change is infrequent and significant in scale, with Kiazen the are small and frequent. Everyone in the business is encouraged to make suggestions.

+s =
- Small changes are easier to implement
- No large disruptions
- Changes are less likely to be met with resistance
-Can be motivating if employees feel valued

-s=
-Difficult to implement in an already existing traditional management approach
-Employees usually fear being open to management about certain things
-Extensive training required to implement new system

21
Q

What is a ‘Quality Circle’?

A

A group of workers who do the same or similar work, meeting regularly to identify, analyse and solve work related problems.

22
Q

What is ‘Cell production’ style of production? What are some positives and negatives?

A

A lean production method
A form of team working where production processes are split into cells, each cell takes full responsibility for a specific unit of work

+s=
- Closesness of cell members can improve communication
- Can reduce time waste, improve efficiency through specialisation
- Quality improves

-s=
-Different cells may work at different speeds
- Company culture has to encourage trust
- Labourers need to be multi skilled incase there is a need to switch between cells

23
Q

What is ‘Lean Design’ style of production? What are some positives and negatives?

A

A lean production method
Based on fast product design in order to rapdily adapt to changes in consumer preferences.

+s=
-If succesful, a business gets first mover advantage, allowing them to price skim

-s=
- HIGH COST on tech to both research, design and produce products in time

24
Q

What is the traditional style of production? What are some positives and negatives?

A

The traditional style of production is known as ‘Just in Case’, is where the business hold lots of stock.

+s=
- EOS benefits, buying in bulk, lowering AC
- WIll spend less on delivery costs than JIT
- Less reliability on suppliers
-Easily react to unexpected increases in demand

-s=
- High storage costs
-Higher risk of stocks perishing and waste

25
Q

On an essay about ‘Just in Case’ VS ‘Just in Time’, what evaluation points should we make?

A

Use JIC when:
-Hard to predict consumer demand/trends
-Components have a long shelf life
-Components have a high transport cost
OPPOSITE FOR JIT

-Compnay must balance out whether it would benefit from EOS gains more or savings in storage costs more.
-Evaluate reliability of supplier.

26
Q

What is efficiency?

A

The extent to which production is maximised based on the available set of factors of production.

27
Q

Why is it important to increase efficiency?

A

Maximising production from given factors will lower AC per unit. This can lead to:
-Reduce selling price, higher demand, maintain price and higher profits, use efficiency gains to improve quality, rep[utation, added va;ue OR wages, motivation, labour productivity……….

28
Q

How can a business improve the efficiency of each of the factors of production?

A

Labour = training / education / new management style
Capital = Increase investment in technology
Enterprise = Increase output to achieve EOS
Land = Bulk buy to reduce costs

29
Q

What are some +s/-s of using technology to improve operations?

A

+s=
-Reduces costs = VC, less labour, stock holding
-Reduces wastes, no mistakes
-Improves consistancy of quality

-s=
-Redundancies, leading to resistance to change
-Lower morale
-Cost
-Internet lowers barriers to entry

30
Q

What is quality?

A

Quality refers to all of the features of a product/service that allow it to satisfy customers

31
Q

Why is quality important?

A
  • Competitive advantage
  • Sales volume
  • Unique Selling Point
    -Impace on selling price
    -Cost reductions in long term as reduced number of returns
    -Improved brand loyalty
32
Q

What is quality control?

A

Where a company monitors the quality of completed work and goods from suppliers.

33
Q

What are the 2 methods of quality control?

A

Quality inspections - Outsourcing profesional inspectors
Quality assurance - Self checking in house

34
Q

What are the +s/-s of Quality Inspections?

A

+s=
- Secure system with trained profesionals, no bias

-s=
- Little motivation for workers to improve their own quality
-More costly than in house checks
-Workers may feel they are not trusted

35
Q

What are the +s/-s of Quality assurance?

A

+s=
-Employees have a sense of ownership and control
-Costs are reduced
-Staff taking pride in their work should lead to more consistent levels of quality

-s=
-Possibly lower standard than outsourced profesionals

36
Q

What are some benefits of improving quality?

A
  • Competitve advantage
  • Increased sales volume
  • USP
  • Scope to increase selling price
  • Greater brand loyalty and reputation
37
Q

What are some difficulties of improving quality?

A

-Difficuly to convince staff that quality needs improving
-Difficulty in agreeing on best solution
-High costs
-Understanding customer views on quality

38
Q

What is flexibility in a business?

A
  • The ability of an organisation to change its operations in some way
39
Q

How can a business improve its product flexibility?

A

By designing production lines that can be quickly altered to change the final product

40
Q

How can a business improve its volume flexibility?

A

By maintaining high levels of spare capacity

41
Q

How can a business improve its delivery flexibility?

A

By having access to more delivery vehicles and a flexible workforce

42
Q

What is mass customisation? What are some +s and -s?

A

Offereing individually tailored goods to customers on a large scale. Products designed for an individual that are produced on a mass scale.

+s=
- A market in which customers are willing to pay a premium price for individuality
- Quick responsiveness to market changes
- Scope for mass efficiency and EOS

-s=
- Sophisticated management systems
-Greater expense
- Problems with rejected products
- Flexibility required from suppliers

43
Q

What is dependability?

A

A measure of whether a business is on time providing a good/service

44
Q

What are some strategies that a business can employ to manage supply to match demand? (4)

A
  • Producing to order
  • Use of temporary and part-time workers
  • Outsourcing
    -Controlling levels of inventory
45
Q

On an inventory control chart, what is the buffer level?

A

The min.level of inventory required by a business.

46
Q

On an inventory control chart, what is the reorder level?

A

The level of inventory at which an order is placed for new stock.

47
Q

On an inventory control chart, what is the lead time?

A

The time it takes from the order being placed to the inventory arriving.

AQA A Level Business (13 decks)

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