4.5 Managing inventory and supply chains

Question 1

What are the different operational objectives

Answer 1

Flexibility
Speed of response
Dependability

Question 2

Impact of flexibility

Answer 2

Responds to changes in demand with little notice

Question 3

How can a business improve its flexibility

Answer 3

Mass customisation

Question 4

What is mass customisation

Answer 4

Approach to production: products being made in mass to achieve lower unit costs, with a final process that allows for customisation

Question 5

Benefit of mass customisation

Answer 5

Allows a business to respond to customer needs through customising products requested by customers

Question 6

The importance of speed of response as an operational objective

Answer 6

The ability to meet customers’ expectations in terms of the time taken to produce and distribute a product can contribute to customer satisfaction

Question 7

How can a business improve speed of response

Answer 7

Focusing on efficiency during the production process as increases efficiency and productivity will allow businesses to produce and therefore distribute products more quickly

Question 8

The importance of dependability as an operational objective

Answer 8

Customers trust reliable businesses which can fulfill orders when they are places

Question 9

How can a business improve dependability

Answer 9

Ensuring it uses reliable suppliers which it can trust

Question 10

Meeting demand involves…

Answer 10

Increasing supply

Question 11

How can a business increase supply

Answer 11

Outsourcing
Hiring flexible workers
Minimising waste

Question 12

Impact of outsourcing

Answer 12

Increases output

Question 13

Impact of hiring flexible workers

Answer 13

Using part-time and temp workers can support the business flexibly when demand increases

Question 14

Impact of minimising waste

Answer 14

Using a producing to order approach which minimises waste and ensure the availability of raw materials to create products in demand

Question 15

What do inventory control charts show

Answer 15

Maximum stock level, re-order level, lead time and buffer stock

Question 16

Maximum stock level

Answer 16

The maximum stock level that a business is willing to operate at

Question 17

Re-order level

Answer 17

The point at which further stock is ordered

Question 18

Buffer stock

Answer 18

The spare stock a business holds in case there is an unexpected increase in demand

Question 19

Lead time

Answer 19

The time taken for the stock to arrive after it is ordered

Question 20

What is outsourcing

Answer 20

When a business uses another business to make part of its product or provide part of its service

Question 21

Advantages of outsourcing

Answer 21

Provides cost savings because a third-party may be able to create or produce a product or service at a lower cost than the original business

Question 22

Disadvantages of outsourcing

Answer 22

Can lead to quality problems if the business that wins the outsourcing contract does not uphold the same quality standards
The business may lose its influence on quality control