4. Operations Management Flashcards
Productivity
the output measured against the inputs used to create it
Buffer inventory level
the inventory held to deal with uncertainty in customer demand and deliveries of supplies
Lean production
a term for those techniques used by businesses to cut down on waste and therefore increase efficiency, e.g. by reducing the time it takes for a product to be developed and become available for sale
Kaizen
a Japanese term meaning ‘continuous improvement through the elimination of waste
Just-in-time
a production method that involves reducing or virtually eliminating the need to hold inventories of raw materials or unsold inventories of the finished product
Job production
where a single product is made at a time
Batch production
where a quantity of one product is made, and then a quantity of another item will be produced
Flow production
where large quantities of a product are produced in a continuous process. It is sometimes referred to as mass production
Fixed cost
costs which do not vary in the short run with the number of items sold or produced. They have to be paid whether the business is making any sales or not. They are also known as overhead costs.
Variable cost
costs which vary directly with the number of items sold or produced
Total cost
fixed plus variable costs
Average cost per unit (unit cost)
the total cost of production divided by total output
Economies of scale
the factors that lead to a reduction in average costs as a business increases in size
Diseconomies of scale
the factors that lead to an increase in average costs as a business grows beyond a certain size
Break-even point
the level of sales at which total costs = total revenue
