4.2 - Analysing operational performance Flashcards
What is the purpose of the operations department?
The operations department looks after the production of the products that a business sells. The operations department collects data about the production of products and this data can be used to support different calculation.
What is labour productivity, and how is it calculated?
Labour productivity calculates how much an employee produces.
Output per period / number of employees in period
What is unit cost, and how is it calculated?
Unit cost is the cost per unit produced
total unit costs / units produced
What is capacity utilisation, and how is it calculated?
Capacity utilisation works out what percentage of its maximum output is being utilised/used.
(Total output / total capacity) x 100
What problems may arise in traditionally analysing a business’s operational data?
Traditional operations data may not apply to businesses that have no physical product etc. Free services and internet-based business are examples where these calculations may not apply.
What is Quality control?
Quality control focuses on a small number of employees inspecting the product at the end of the production line.
What is quality asurance?
Quality assurance gives responsibility to employees to ensure the quality of the products, rather than an inspector checking on them which can promote a negative culture between management and employees. This responsibility and sense of ownership are particularly important for job satisfaction for the job roles in factories, as often this is repetitive and low skilled work. Therefore, not only does quality assurance ensure the quality of the products is good enough at every stage, but it could also improve job satisfaction and staff morale.
This is managed by the human resources department, unlike quality control which is managed by operations.
What is the that effect good product quality control can have on the finance department?
There is a better chance that the materials can be reused if the fault is spotted sooner. This results in lower costs for the business as they have a better chance of reusing materials and have not wasted time and money by allowing a faulty product to go all the way through the production process.
