3.4.2

Question 1

what is operational data?

Answer 1

• used to asses the operational performance of a business.
• the data is compared to targets and assessments

Question 2

what is productivity?

Answer 2

a measure of the ratio of output to inputs used in a production process

Question 3

what is labour productivity?

Answer 3

measure of the output per worker over a given period of time

Question 4

what is the formula for labour productivity?

Answer 4

total output/number of employees

Question 5

what are unit costs?

Answer 5

• measures the cost of producing one unit of a product
• the higher a firms unit costs, the less efficient a business is said to be controlling their costs

Question 6

what is the formula for unit costs?

Answer 6

total costs/units of output

Question 7

what is capacity?

Answer 7

• measures what a business is able to produce using its existing resources
• places a physical limit on the quantity of goods a business is able to manufacture
• when a firm operates at maximum they are utilising all resources available to them

Question 8

what is capacity utilisation?

Answer 8

measures the output that is produced with existing resources, as a percentage of the maximum possible output for a business

Question 9

what is the formula for capacity utilisation?

Answer 9

actual output/ maximum possible output x100

Question 10

what are the benefits of full capacity?

Answer 10

• low unit costs
• staff job security
• increased competitiveness
• higher profits
• attract new investments

Question 11

what is the capacity utilisation target?

Answer 11

90% capacity utilisation is a sustainable target level

Question 12

what does having 100% capacity utilisation not allow a business to do?

Answer 12

• accept any additional orders from customers as there is no spare capacity
• provide staff training as all the staff are busy working
• repair or service their machinery as all is being used

Question 13

what are some management decisions?

Answer 13

• managers use operational data to help make decisions and to identify opportunities and threats
• have to consider costs involved in a decision and balance the possible financial rewards
• wider stakeholder views need to be taken into account

Question 14

what to do if labour productivity is low?

Answer 14

• training
• financial rewards
• increase motivation

Question 15

what if unit costs are too high?

Answer 15

• switch suppliers
• impact on quality of goods
• high defects

Question 16

what to do if there are capacity concerns?

Answer 16

• expand to cope with the extra demand
• deactivate under-used resources

Question 17

how can a business produce more units per worker?

Answer 17

• introduce technology that speeds up production
• recruiting workers with better skills and qualifications
• improve employee motivation
• better training for staff so they are quicker and more efficient
• improve flexibility

Question 18

what are operations management in charge of?

Answer 18

• encouraging efficient ways of making the product/service
• encourage that waste is minimised
• deciding how to produce the product
• use of technology
• quality
• inventory
• working with suppliers
• flexibility
• managing capacity