4.1a Understanding Operational Objectives Flashcards
Operations management definition
Process that uses the resources of an organisation to provide the right goods or service for the customer
Operational objectives definition
Objectives of the operations management function within an organisation
Unit cost definition
The cost of producing one unit of output
Unit cost formula
Unit cost = total cost ÷ units of output
Quality definition
Features of a product or service that allow it to satisfy customers
Quality is important because
- Markets are more competitive
- Customers are more knowledgeable and demanding
- Information about poor quality can be shared easily
Quality targets
- Have a low defect rate
- Customer satisfaction
- Low amount of customer complaints
Speed of response definition
Time taken for a customer requirement to be fulfilled.
Efficiency and flexibility targets
- Labour productivity
- Output per time period
- Capacity utilisation
Adding value definition
Process of increasing the worth of resources by modifying them
Ways value can be added
- Transformation of various components
- USP
- Building a brand
Advantages of adding value
- Higher price can be charged
- Protection against competitors offering lower prices
- Focuses business on its target market segment
Examples of operational objectives:
- Costs
- Quality
- Speed of response
- Efficiency
- Added value
Added value formula
Added value = sales revenue - cost of goods and services
Internal influences on operational objectives:
- Nature of product
- Availability of resources
- Overall objectives
