3.4 operations

Question 1

operations

Answer 1

the function of a business that is concerned with providing customers with a product that they want in a timely, effective, efficient and profitable way
operations is about the actual production of the good or service sold by a business

Question 2

effectively managed operations allow a business to

Answer 2

control costs of production
add value to its products
guarantee the right level of service
gaurantee the right level of quality
provide itself with ‘green’ credentials
meet the demand for its products or services

Question 3

operations and added value

Answer 3

operations management is the key factor in the transformation process by which a business cretes its products and services
therefore operations is the key to adding value to what a business does

Question 4

what do operations departments typically set objectives around

Answer 4

costs
quality
speed of response and flexibility
dependability
environmental objectives

Question 5

how do costs influence operational objectives

Answer 5

the operations department must be able to control the costs of production in order to maximise profit margins

Question 6

how does quality influence operational objectives

Answer 6

the operations department is responsible for ensuring these specifications are met, ensuring the product or service is fit for purpose

Question 7

how does speed of response and flexibility influence operational objectives

Answer 7

opportunities and sales can be lost if a business cant meet order volumes in a specific time frame
operations is also responsible for ensuring the product is suitably flexible to meet the needs of different customers

Question 8

how does dependability affect operational objectives

Answer 8

businesses cant afford to let their customers down
those that tend to lose loyalty and repeat purchases
dependability can be the key factor by which a customer chooses its supplier, especially in industrial markets

Question 9

how does environmental objectives influence operational objectives

Answer 9

the production processes can cause many negative externalities such as pollution
businesses will set targets on a number of environmental factors such as recycling and waste disposal

Question 10

the 4V’s of operations

Answer 10

can be used to analyse key isssues in the operational decisions of any business
volume
variability
variety
visibility

Question 11

internal and external influences on operational objectives

Answer 11

legal/political factors
economic factors
employee skills
nature of the product
social factors
technological factors

Question 12

how do legal/political factors influence operational objectives

Answer 12

such as health and safety legislation and industry regulation

Question 13

how do economic factors influence operational objectives

Answer 13

operations must be able to adapt to changing levels of demand in the market

Question 14

how do employee skills influence operational objectives

Answer 14

these may determine objectives, such as the level of quality

Question 15

how does nature of the product influence operational objectives

Answer 15

minimising cost mat be very important for products sold for 1.99

Question 16

social factors that influence operational objectives

Answer 16

consumers continue to expect more personalisation of the products they buy.

Question 17

technological factors that influence operational objectives

Answer 17

technology drives all operational decisions in particular new product development and processes of manufacturing and distribution

Question 18

formula used to analyse operational performance

Answer 18

labour productivity

Question 19

labour productivity

Answer 19

measures the output per employee and is a measure of how productive the workforce is
productivity is a measure of output in relation to the input- the workers

Question 20

labour productivity formula

Answer 20

output per time period divided by number of employees

Question 21

unit costs

Answer 21

the unit cost is sometimes referred to as the average cost because it takes into account the total costs of a business (fixed + variable) and divides this by the level of outtput

Question 22

unit cost formula

Answer 22

total costs of production divided by number of units of output produced

Question 23

capacity utilisation

Answer 23

the capacity of production is the maximum amount a business can produce over a period of time given the resources it has available
capacity utilisation measures existing output as a percentage of the maximum possible output

Question 24

capacity utilisation

Answer 24

actual output in a given time period divided by maximum possible output in a given time period x100

Question 25

ways to increase efficiency and labour productivity

Answer 25

use data to set targets and motivate the workforce use to identify training needs of the workforce use to test differrent production techniques such as teamworking or cell production use to measure the efficiency of the workforce use as a tool to identify employees for praise and reward use as a tool for performance related pay

Question 26

using unit cost data

Answer 26

use to set prices based on profit margin target use to make decisions about which products to produce use to make decisions about scale of production- what level of output will achieve sufficiently low costs use alongside variable costs to analyse distribution of overheads use as a target to drive operational decisions such as how, where and what to produce

Question 27

how can capacity utilisation be used

Answer 27

setting targets for output identifying when a business should increase capacity (growth) identifying when a business should decrease capacity (retrenchment) identifying the maximum level of output before production becomes ineffective (diseconomies start to occur)

Question 28

when does capacity utilisation data become most effective

Answer 28

when used alongside the other measures of performance such as labour productivity and unit costs

Question 29

what happens to unit costs as capacity utilisation increases

Answer 29

unit costs will fall as the business experiences economies of scale unit costs may rise as a usiness approaches maximum capacity due to stress mistakes and diseconomies

Question 30

what does imroving effieciency mean

Answer 30

getting more output from a given level of input can also consider efficiency as using the minimum level of resources to achieve the desired product at the right quality as efficiency is directly linked to unit cost it is a key route to maximising profis

Question 31

how are productivity and efficiency connected

Answer 31

directly connected greater productivity means the workforce is more efficient and efficiency across the business allows more resources to be devoted to production

Question 32

benefits of improved efficiency

Answer 32

labour productivity increased unit costs fall resources such as labour, expertise and time can be reallocated profit margins increase improved flexibility across the business opportunity to explore new ventures such as new production lines ability to charge lower prices and therefore improve competitiveness

Question 33

ways to increase efficiency and labour productivity

Answer 33

new ways of working training new technology better management introduce new reward systems

Question 34

how do new ways of working increase efficiency and labour productivity

Answer 34

design the job and workforce to be more effective

Question 35

how does training increase efficiency and labour productivity

Answer 35

invest in training to improve workers skills and motivation

Question 36

how does new technology increase efficiency and labour productivity

Answer 36

speed up processes and reduce human error

Question 37

how does better management increase efficiency and labour productivity

Answer 37

improve supervision, direction ad leadershop of the workforce

Question 38

how does introducing new reward systems increase efficiency and labour produvtivity

Answer 38

in order to create a new incentive to work harder (incentives linked to output)

Question 39

difficulties in increasing efficiency and labour productivity

Answer 39

sometimes a trade off when increasing labour productivity increasing output of a worker may increase productivity and unit costs in the short term but high levels of output can cause stress and burnout it is also true that a focus on output can compromise quality customer service and creativity costly mistakes and faults are also more likely to occur leading to prodct returns and complainst

Question 40

lean production

Answer 40

involves practices that reduce waste in the operational process the main forms of lean production are focused on reducing defects, time wasted and inventory levels

Question 41

waste

Answer 41

in business waste can be considered anything that doesnt add value to the product

Question 42

what are the 7 types of waste a business can reduce

Answer 42

motion- unessecary movement of people transport- unessecary movement of the products or materials inventory-too much stock defects-faulty products waiting- for processes to finish befpre others can begin extra processing- adding features that do not add value overproduction- producing products that cant be sold easily

Question 43

ways of reducing waste

Answer 43

designing the work areas within a business so employees are close together and in close proximity to the resources they require designing production facilities to minimise movement using effective stock control systems adopting quality assurance techniques to minimise defualts designing products and services to meet the exact needs pf customers using a range of forecasting trchniques to predict demand and match production accordingly

Question 44

what are the two production methods

Answer 44

just in time kaizen lean organisation

Question 45

just in time

Answer 45

supply of products and raw materials triggered by demand from customers stock levels kept to a minimum and resources and capital are freed up relies on effective communication and systems for order processing and delivery

Question 46

kaizen

Answer 46

japanese concept of continous improvement eg by making marginal improvements in efficiency

Question 47

lean organisations

Answer 47

only uses processes that add value and are effective remove anything that isnt necessary eg meetings, processes and organisational structure could be re designed

Question 48

difficulties of adopting lean production

Answer 48

if there are disruptions in production, business may be vulnerable if there is no inventory it creates over reliance on suppliers to deliver on time there is the danger of stripping away processes and features that employees and customers value it puts pressure on workforce to self check and monitor their own work- does the workforce have the skills kaizen can bring about change that may be resisted by the workforce

Question 49

how can a business increase capacityr

Answer 49

sub contract out production to another business offer overtime pay to the workforce employ workers on temporary contracts

Question 50

how can a business decrease capacity (or utilise idle resources)

Answer 50

rationalisation (redundancies or sale of assets) sub contract in work from another business

Question 51

what are the two things a business' production process can be

Answer 51

labour intensive capital intensive the balance of the two might depend on the nature of the product and the target market

Question 52

capital intensive

Answer 52

high level of capital investment (such as use of machinary) mass production, standardisation, efficient production

Question 53

labour intensive

Answer 53

high level of human input in the production process highly specialist, personal, service industry, high level of skill required

Question 54

what is quality

Answer 54

the extent to which a product or operation meets its customers requirements this means that it is 'fit for purpose' achieving the desired quality has a number of benefits for a business but it is a subjective concept

Question 55

importance of quality

Answer 55

the key to achieving customer needs a high quality product is one that meets customer expectations products must have high quality to compete at the right price point some businesses will differentiate themselves on having a premium quality

Question 56

methods of achieving high quality

Answer 56

train employees in quality procedures invest in technology adopt processses that assure quality work with high quality suppliers involve all employees in managing quality achieve a quality award/mark (recognition from external organisation) have a clear understanding of cusomer needs

Question 57

why does high levels of quality help businesses

Answer 57

imrpove customer satisfaction help the business differentiate its product from competitors add value to the product allowing a premium price to be charged

Question 58

what are the two ways of implementing quality management systems

Answer 58

quality control quality assurance

Question 59

quality control

Answer 59

about the product quality is checked at the end of the production process focus on identifying faults quality control is a specific role- maybe one person

Question 60

difficulties in improving quality

Answer 60

quality can be difficult to improve because customers changing perception of quality is constantly changing a successful business could let quality slip if there is no incentive to outperform rival businesses improving quality can add more work so might be naturally opposed by the workforce measuring quality can be difficult and expensive

Question 61

consequences if poor quality

Answer 61

poor quality can cause a number of problems for a business if products need recallung this can be extremely expensive poor quality can damage brand reputation there may be legal costs if customers sue the company correcting poor quality can be very expensive

Question 62

inventory

Answer 62

refers to the supplies and stock held by the business coordinating inventory and managing the supply chain effectively can influence the competitiveness of a business

Question 63

factorss to consider when managing inventory and the supply chain

Answer 63

some industries rely on speed eg parcel delivery companies, even where speed isnt as important as other factors like quality it can still mean the difference between a customer choosing one business over another meeting a deadline is very important for some industries eg travel industry, all businesses can claim to meet a deadline but reputation precedes a business when it comes to dependability, some businesses may provide 'money back' guarantee if a deadline isnt met flexibility is about customisation- the greater kevel of customisation a business offers the better it is able to meet customer needs, however often greater customisation increases unit costs eg all Dell computers are manufactures to their customers inventory specifications this is known as mass customisation

Question 64

issues in managing inventory

Answer 64

- meeting demand- holding stock allows a business to meet demand -risk- some inventory poses a greater risk than others inventory can be perishable (food), easily damaged in storage (glassware) or become outdated quickly (fashion and tech)

Question 65

what factors will a business consider when choosing the right supplier

Answer 65

the cost and quality of materials dependability ethical practces availability of trade credit level of service flexibility speed

Question 66

what things are seen on an inventory control chart

Answer 66

re-order level re-order quantities buffer inventory lead time

Question 67

re order level

Answer 67

the level at which new inventory will be re ordered this will depend on the buffer stock level and the lead time

Question 68

re order quantities

Answer 68

the quantity of an item the business will order at a given time

Question 69

buffer inventory

Answer 69

the minimum amount of inventory a business wants to hold

Question 70

lead time

Answer 70

how long it takes from the order being placed with the supplier to it arriving

Question 71

what issues must a business consider when using inventory control charts

Answer 71

unexpected changes in demand long lead times which make inventory planning more difficult suppliers who fail to deliver choosing the right buffer stock level can affect efficiency and cash flow human or computer error when re ordering stock

Question 72

the supply chain

Answer 72

refers to the netrowk of providers involved in the process of getting the product to the customer may involve a number of people and organisations

Question 73

what will effective management of the supply chain involve

Answer 73

supplier strategy- such as long term vs short term agreements agreeing contracts with suppliers- service level agreement or a code of conduct deciding on what aspects of the process the business will do itself and which it will outsource vertical integration- will the business take control of the supply chain for itself

Question 74

managing supply to meet demand

Answer 74

employ a flexible workforce outsource production to other businesses when demand is high outsourcing can help a firm subcontract a specialist task such as payroll and help manage capacity utilisation queuing systems- automated queueing can help manage supply during high demand periods produce to order- only producing a product when an order comes in