4 - The Use Of Data In Operational Decision Making

Question 1

What Does Operational Data Allow?

Answer 1

A business to measure its performance.

Question 2

What Are The Types Of Operational Data?
(4 Points)

Answer 2

~ Labour productivity.

~ Unit costs (AC).

~ Capacity.

~ Capacity utilisation.

Question 3

What Is Labour Productivity?

Answer 3

Output per worker.

Question 4

What Is The Formula For Labour Productivity?

Answer 4

Total Output / No. Of Employees.

Question 5

How Can You Increase Labour Productivity?
(4 Points)

Answer 5

~ Introduce machinery to support labour.

~ Train employees to improve skill set.

~ Using motivational theories.

~ Adapt management style.

Question 6

What Is The Importance Of Having A Higher Labour Productivity?
(5 Points)

Answer 6

~ Increases efficiency.

~ Decreases labour cost per unit.

~ Decreases prices for consumers.

~ Increases competitiveness.

~ Increases profit.

Question 7

What Are The Barriers To Improving Labour Productivity?
(4 Points)

Answer 7

~ Resistance from employees.

~ Cost of training and using machinery.

~ Motivation impacts.

~ Quality impacts.

Question 8

What Are Average Unit Costs?

Answer 8

Average cost of producing a single unit of output.

Question 9

What Is The Formula For Average Unit Cost?

Answer 9

Total Costs / Units Sold

Question 10

What Are Factors Influencing Unit Costs?
(4 Points)

Answer 10

~ Number of units produced.

~ Labour productivity of the workforce.

~ Supplier costs.

~ Material usage in comparison to wastage.

Question 11

What Is Capacity?

Answer 11

Maximum output in a given time period, if all resources are fully utilised.

Question 12

What Is Capacity Utilisation?

Answer 12

% of the maximum output being used in a given time period.

Question 13

What Is The Formula For Capacity Utilisation?

Answer 13

Actual Output / Max Output x 100

Question 14

What Is The Ideal Result For Capacity Utilisation?

Answer 14

~ Higher the better.

~ But not always.

Question 15

Why Would A Business Rather A Higher Capacity Utilisation Than A Lower Capacity Utilisation?
(2 Points)

Answer 15

~ Higher -> suggests the business is more efficient -> less waste -> decreases unit costs.

~ Lower the unit costs -> charge lower prices in a competitive market -> can lead to higher demand.

Question 16

Why Would A Business Want A Lower Capacity Utilisation?
(2 Points)

Answer 16

~ Suggests you have spare capacity -> gives a firm operation flexibility -> cope with additional demand.

~ Spare capacity could improve quality of product -> production won’t be rushed -> less quality issues.