3.4 Operational management

Question 1

What is meant by Added Value?

Answer 1

The increase in worth of a product or service because of the production process or additional features, measured by the difference between the selling price and the cost of inputs.

Question 2

What is meant by Labour Productivity?

Answer 2

The measure of output produced per unit of labor input.

Question 3

What are Unit Costs (average costs)?

Answer 3

The average cost per unit of output, calculated by dividing total production costs by the number of units produced.

Question 4

What is Capacity?

Answer 4

The maximum level of output or production that a business can sustain over a given period with its existing resources.

Question 5

What is meant by Capacity Utilisation?

Answer 5

The extent to which a business utilises its production capacity to meet demand, calculated as actual output divided by maximum possible output multiplied by 100.

Question 6

What is meant by Efficiency?

Answer 6

The ratio of output to input, measuring how well resources are utilised to achieve desired outcomes.

Question 7

What is meant by Just In Time (JIT)?

Answer 7

An inventory management approach that aims to minimise inventory levels by receiving goods only as they are needed in the production process.

Question 8

What is meant by Just In Case (JIC)?

Answer 8

An inventory management approach where businesses maintain higher inventory levels as a
precaution to meet unexpected increases in demand or supply chain disruptions.

Question 9

What is Lean Production?

Answer 9

A production philosophy that emphasises minimising waste, improving efficiency and maximising value for customers through continuous improvement.

Question 10

What is Labour Intensive?

Answer 10

A production process or industry that requires a significant amount of labour relative to
capital inputs.

Question 11

What is Capital Intensive

Answer 11

A production process or industry that relies heavily on machinery, equipment or capital investment relative to labour inputs.

Question 12

What is Quality Assurance?

Answer 12

The systematic process of ensuring that products or services meet specified standards and conform to established quality criteria.

Question 13

What is Quality Control?

Answer 13

The process of inspecting, testing and monitoring products or services during and after production to ensure they meet predetermined quality standards.

Question 14

What is Outsourcing?

Answer 14

The practice of contracting out certain business functions or processes to external third-party service providers.

Question 15

Who are Temporary Employees?

Answer 15

Workers who are hired for a limited period to fulfill specific roles or tasks.

Question 16

Who are Part-Time Employees?

Answer 16

Workers who are employed for fewer hours than full-time employees, typically working on a regular schedule.

Question 17

What is meant by Producing To Order?

Answer 17

A production strategy where goods are manufactured only after receiving customer orders, reducing the need for inventory storage and minimising waste.

Question 18

What is Lead Time?

Answer 18

The amount of time it takes for an order to be fulfilled from the moment it is placed until it is delivered to the customer.

Question 19

What are Re-Order Levels?

Answer 19

The predetermined inventory level at which new orders should be placed to replenish stock and maintain sufficient inventory levels.

Question 20

What is Buffer Level?

Answer 20

An additional inventory stock kept as a reserve to account for unexpected fluctuations in demand, supply chain disruptions or production delays.

Question 21

What is Re-Order Quantity?

Answer 21

The quantity of goods that should be reordered when inventory levels reach the re-order point, ensuring continuity of supply.