4 - Operational Efficiency

Question 1

What Does Operational Efficiency Involve?

Answer 1

Maximising the level of output achieved from given inputs.

Question 2

How Can Efficiency Be Improved?
(5 Points)

Answer 2

~ Increasing capacity utilisation.

~ Increasing labour productivity.

~ Lean production techniques.

~ Choosing the optimal resource mix.

~ Using technology.

Question 3

What Does Capacity Affect?

Answer 3

Ability of a firm to match supply to demand.

Question 4

What Does Capacity Utilisation Affect?

Answer 4

Whether resources are being used efficiently or whether they are lying idle.

Question 5

What Does A Low Capacity Utilisation Mean?
(2 Points)

Answer 5

~ Means that resources are not being made to work effectively for the business.

~ Results in high unit costs.

Question 6

What Does A High Capacity Utilisation Mean?
(3 Points)

Answer 6

~ Means the firm is sweating its assets.

~ Results in lower unit costs.

~ May affect quality and cause stress to workers.

Question 7

What Is The Importance Of Capacity?
(3 Points)

Answer 7

~ Ability to match supply to demand.

~ Image / public perception.

~ Ability to achieve business objectives.

Question 8

What Steps Should A Business Take If It Is Underutilising?
(3 Points)

Answer 8

~ Increase demand.

~ Downsize.

~ Lease off spare capacity.

Question 9

What Steps Should A Business Take If It Is Overutilising?
(3 Points)

Answer 9

~ Reduce demand.

~ Outsource parts of the business operations.

~ Increase capacity by investing in more resources.

Question 10

What Happens When A Firm Increases Labour Productivity?

Answer 10

Lowers the labour cost per unit.

Question 11

How Can A Firm Increase Labour Productivity?
(5 Points)

Answer 11

~ Training.

~ Increase motivation.

~ Implement new technology.

~ Better working practices.

~ Improved recruitment and selection.

Question 12

What Are The Difficulties A Firm May Experience When Increasing Labour Productivity?
(3 Points)

Answer 12

~ Increase waste affecting unit cost.

~ Damage to long term reputation.

~ Employees may feel exploited.

Question 13

What Is Lean Production?

Answer 13

Practices that focus on cutting waste whilst maintaining quality.

Question 14

What Are The 2 Lean Production Techniques?
(2 Points)

Answer 14

~ Just-In-Time (JIT).

~ Kaizen.

Question 15

What Is JIT Operations?

Answer 15

A technique used to minimise stock holdings at each stage of the production process, helping to minimise costs.

Question 16

What Is Kaizen?

Answer 16

A technique that concentrates on small but frequent improvements in every aspect of the production process.

Question 17

What Are The Benefits Of JIT?
(4 Points)

Answer 17

~ Less costs in holding inventory.

~ Less working capital required.

~ Lower associated costs.

~ Avoids having unsold costs.

Question 18

What Are The Drawbacks Of JIT?
(4 Points)

Answer 18

~ Little room for error.

~ Reliant on suppliers.

~ Unexpected orders are harder to meet.

~ High initial set up costs.

Question 19

What Are The 4 Factors Of Production?
(4 Points)

Answer 19

~ Land.

~ Labour.

~ Capital.

~ Enterprise.

Question 20

What Is The Capital Intensive Mix Of Resources?

Answer 20

Uses a high proportion of capital such as machinery in the production of a good or service.

Question 21

When Does The Capital Intensive Mix Of Resources Tend To Occur?

Answer 21

The secondary sector.

Question 22

What Is The Labour Intensive Mix Of Resources?

Answer 22

Uses a relatively high proportion of labour.

Question 23

When Does The Labour Intensive Mix Of Resources Tend To Occur?

Answer 23

The tertiary sector.

Question 24

What Are The Advantages Of The Capital Intensive Mix Of Resources?
(3 Points)

Answer 24

~ Increased productivity.

~ Improved quality and speed.

~ Reduced labour costs.

Question 25

What Are The Disadvantages Of The Capital Intensive Mix Of Resources?
(3 Points)

Answer 25

~ High investment outlay.

~ Lack of human initiative.

~ Retraining required to use new equipment.

Question 26

What Are The Advantages Of The Labour Intensive Mix Of Resources?
(3 Points)

Answer 26

~ Cheaper than capital intensive.

~ Continuous improvement through workforce benefits the firm.

~ Government spending available to protect jobs in the economy.

Question 27

What Are The Disadvantages Of The Labour Intensive Mix Of Resources?
(3 Points)

Answer 27

~ Could be strikes.

~ Lack of skilled labour in some industries.

~ Human resources costs can be high.

Question 28

What Is Technology?

Answer 28

Is the use of tools, machinery and computers to help produce a good or service.

Question 29

What Are The Types Of Technology That Improve Operational Efficiency?
(4 Points)

Answer 29

~ Robotics.

~ Automation.

~ Communication.

~ Design technology.

Question 30

What Is Robotics?

Answer 30

Programming robots to carry out tasks more traditionally completed by humans.

Question 31

What Are Examples Of Robotics?
(3 Points)

Answer 31

~ Productions processes.

~ Logistics.

~ Quality assurance.

Question 32

What Are Advantages Of Robotics?
(5 Points)

Answer 32

~ Accuracy.

~ Consistency.

~ Speed.

~ Resilience.

~ Hazardous environments.

Question 33

What Are Disadvantages Of Robotics?
(4 Points)

Answer 33

~ High initial costs.

~ High maintenance costs.

~ Loss of human touch.

~ Lack of initiative.

Question 34

What Is Automation?

Answer 34

Use of machines to control a process.

Question 35

What Are Examples Of Automation?
(3 Points)

Answer 35

~ Stock control.

~ Production lines.

~ Warehousing.

Question 36

What Are Examples Of Internal Communication?
(3 Points)

Answer 36

~ Interdepartmental.

~ When processing orders via hand held devices.

~ Quality of data.

Question 37

What Are Examples Of External Communication?
(3 Points)

Answer 37

~ Working with suppliers.

~ Sourcing suppliers.

~ Tracking of the supply chain, informing customers of progress in their order.

Question 38

What Is CAD?

Answer 38

Computer aided design.

Question 39

What Are The Benefits Of CAD?
(4 Points)

Answer 39

~ Efficiency and productivity.

~ Cost savings.

~ Innovation and creativity.

~ Improved accuracy and quality.

Question 40

What Are The Drawbacks Of CAD?
(4 Points)

Answer 40

~ High initial costs.

~ Requires skills and training.

~ Over-reliance.

~ Time consuming.