5. Operations Mangement Flashcards
The role of operations management
Transportation of goods/services
Turning raw materials into finished products in the secondary sector EG WOOD TO FURNITURE
Extraction of raw materials eg harvesting and mining in the primary sector
Operations management
this is all the activities involved in the transformation process of input to outputs
Job production
Producing unique items that are tailor made to meet the needs of individual customers. eg A HAIRCUT
Batch production AND features
A production method that involves producing similar items in groups. eg similar clothing
- produced in stages
- standardized products
Batch production involves making a group of identical items together, and each stage of operation is performed on the whole group before it moves on to the next stage.
FEATURE INCLUDE
Limited quantity produced according to specific specifications.
Non-continuous: batches are produced at intervals.
Batches more from stage to stage of production together (in other words, stage 1, one process occurs. Then, the batch moves to the next stage, where another process is done, etc).
Mass Customization
The production of large quantities of goods that can be adjusted to customer specifications.
eg mass job production eg cars
Mass/Flow Standardized Production
The production of large amounts of standardised products on an assembly line. eg mass batch production
Features of lean production
Less waste
Greater efficiency
Methods of lean production
Continuous improvement kaizen
Just in time (JIT )
Continuous improvement kaizen
This lean production method involves making continuous improvements to the production method to archieve greater efficiency
Just in time (JIT )
This lean production where materials are ordered to arrive only when they are needed
Just in time (JIT ) advantages and disadvantages
Advantages
Reduces storage costs
items may not get damaged
Disadvantages
inflexible to sudden changes in demand eg increase
reliant on supplier to deliver on time
Continuous improvement kaizen advantages and disadvantages
YOU sTOP THE WHOLE PROD PROCESS TO FIX A DEFECT
Advantages
Motivating to employees as they are involved in decision making
Reduced costs for business due to higher efficiency.
Disadvantages
changing the culture to kaisen is time consuming
it may be costly to train employees
LESS PROD AS TIME IS TAKEN OFF FOR THESE MEETINGS
SUGGESTIONS AY NOT BE IMPLEMEMNTED
Quality Circles
This is when small groups of employees from different departments meet regularly to assess quality issues and make recommendations for improvements.
Advantages and disadvantages of quality circles
Advantages
WORKER MOTIVATION
LESS COSTS DUR TO GOOD SUGGESTIONS
working in a team to improve problems can be motivating
employees may come up with good deals to improve work efficiency
Disadvantages
Less productivity as they stop working to talk
could be demotivating if ideas aren’t used
employees must be trained
Bench Marking
This is the comparing of products and the processes of a business to competitors
Total Quality Management
This is a zero defect approach where all employees are responsible for maintaining quality standards throughout the production process.
Cradle to cradle manufacturing
This is a sustainable, waste-free production in which all material inputs can be recycled or reused.
Bench Marking advantages and disadvantages
Can help you determine strengths and weaknesses verses your competition and identify your areas of improvement
However,
It is time consuming and expensive to accurately benchmark competition
Advantages and disadvantages of total quality management
Production costs may fall less wastage
may increase brand image for quality
However
very expensive to train all staff and maintain standards for workers
Takes time to change culture
Advantages and disadvantages of cradle to cradle management
better brand image
unique selling point
however
its cheaper to use minerals
time consuming
Factors affecting choice of location of a business
CELL but only LL
transport
cost
Total contribution
this is the total sales revenue minus the total variable costs or the contribution per unit x number of good sold
Contribution per unit
this is the price per unit minus the variable cost per unit
$@ - VC
Supply chain process
the activities from the production of the g/s to the delivery of it to the consumer
Supply chain management
management of the supply chain process
The just in time stock control system
stock is delivered just before it is needed in the production process
the just in case stock control system
maintains buffer stock to manage supplier delays or sudden increase in demand
Crisis Management
tackling a crisis with transparency, clear communication and speedy actions (tcs)
Contengency Planning
creating plans to deal with what if situations
Break even point
definition and how to calculate
is when the goods sold cover all costs thus there is no profit or loss. eg fc dived by contribution per unit
costs = revenues
fc/c
fixed cost divided by contribution
contribution = selling price minus variable cost per unit
Factors affecting operations management so productivity to turn raw materials to finished goods
- economic factors ie labour costs
- Social factors ie ethics and good working working conditions
- environmental factors eg air pollution = sick workers = less productivity
Margin of safety
This is the current output minus the break even output.
co - beo
Target Profit output
this is the fc plus the target profit divided by the contribution per unit
Effects of changes in price or cost to break-even chart
increase in vc and fc due to increase in cost
increase in tr due to increase in price
Limitation of the break even analysis
It assumes all units are sold with no stock
it assumes all costs and revenue are linear
Quality control
Quality control refers to the inspection of a product in order to find defects and remove them before they are delivered to retailers or customers. This quality management strategy only catches problems after they happen; it does not directly improve production to prevent defects in the first place.
Quality assurance,
Strategies to prevent defects and improve products
The benefits of a flow production method
low cost of production
few defects due to uniformality of products
The benefits of a flow production method to SF could include:
It is likely to lead to SF meeting the growing demand for its meals quickly and in the process** reducing the unit costs of production.**
This may allow SF to reduce the price of its meals as they use cost-plus pricing.
The benefits of flow production imply that SF will be true to its mission statement.
Enables SF to control quality more effectively and avoid the mis-labelling issues.
The costs allude to an increase in complexity of the business and the stimulus indicates that some problems are emerging. Hence some costs could include:
Charles’ management style will also come under increased pressure as he does not have experience of transitioning to and using this new technology.
Communication and coordination issues may arise leading to higher unit costs effectively a diseconomy of scale.
Investment in flow production involves high capital costs resulting in possible borrowing and higher gearing.
Pausing production e.g. for changing recipes, can be expensive.
If flow production creates too many additional meals even with growing demand, SF could be left with meals it cannot sell.
Describe one method of lean production other than recycling.
Just in time
Continious improvement (kaizen)
Lean production can include JIT inventory control, JIT production, capacity management, TQM, improved efficiency to improve capacity utilization, involving workers in internal markets, supply chains, flexible systems. Kanban, Kaizen, Andon. Allow quality assurance., Cradle to Cradle, ‘right first time’
‘Decreasing waste’ can only reach one mark since it is a definition of lean production rather than a method.
Define the term lean production.
production methods that aim to reduce waste and increase efficiency.
Producing goods and services efficiently/ minimum wasted resources/improving quality.
Explain how total quality management (TQM) could help AS improve the quality of its products.
TQM is a quality management strategy where every employee is jointly responsible for maintaining the overall quality of the final product.
By employing TQM, the whole process from supplier to delivery will be reassessed with the aim of zero defects throughout.
explain two features of cradle to cradle manufacturing.
Cradle-to-cradle design and manufacturing is a model that focuses on sustainabily producing products in a way that minimises waste and negative effects on the environment and on all stakeholders.
eg using recyclable materials or choosing production methods that reduce pollution.
Cradle to cradle is a sustainable form of manufacturing. QS seeks to create manufacturing principles that attempt to use production techniques that are efficient but also sustainable and waste free. Two features of using cradle to cradle with reference to QS are as follows:
As its name suggests, QS will design and produce its air conditioners in such a way that most, if not all, of the materials used are recyclable. These materials (like glass, metal, plastic) that form parts of the air conditioners will be recyclable and used again for the production of future models. This will minimise waste.
Cradle to cradle manufacturing with also allow QS to reuse some of the ready components of the old air conditions in the new models instead of disposing of those parts. QS might have to offer some financial incentives for the customers to return their old/outdated air conditioners.
The air conditioners will also be built with biodegradable materials if QS cannot recycle the materials: for example, the carton for packaging of the air conditioners. This aspect will allow QS to reduce the environmental impact of its air conditioners.
Define the term just-in-time (JIT) production
this is a LEAN PRODUCTION method where materials are delievered right before they are needed.
JIT production where the focus is on processes that reduce the time within production systems (work-in-progress) and response times with suppliers/customers. The mention of lean production (of which JIT is a part) is useful.
Productivity rate
Productivity rate is a relative measure of how efficiently inputs are converted into output expressed as a percentage.
FORMULA IN FORMUAL BOOKLET
A productivity rate gives an indication of how well resources are used in the
production process.
Total out in a given time period divided by Total workers employed x 100 = Output divided by Capital employed
supply chain
The term supply chain refers to a system, that moves a product from supplier to customers/end users.
Explain one advantage and one disadvantage of working at almost full capacity utilization.
Ads
Constant work could also increase the motivation due to job security.
* Almost full capacity utilization indicates that there is sufficient demand for SD.
Dis
Employees may be overworked and unmotivated.
- All resources are nearly fully utilized, in this case the delivery people, so it is likely that their financial rewards are higher, especially if paid by meals delivered. Even if a fixed salary is paid, high demand at near full capacity utilization may provide opportunities for working overtime.
- Constant work could also increase the motivation of the delivery people due to job security.
- If a fixed salary is paid, SD does not pay its workers for idle time. Better financial management is evident as can be seen by the high 20% GPM.
- Due to satisfying the assumed high demand the profit is likely to increase. See figures presented.
Disadvantages:
* SD flexibility might be reduced if a new organization approaches it to act as a subcontractor. SD will lose out on potential new clients in the currently growing market and growing competition for home delivered, freshly cooked meals.
* The cyclists/delivery people may be overworked and unmotivated. Accidents are more likely to occur when the cyclists are rushed to deliver.
* Quality compromised and SD might lose some contracts, especially as more competitors are entering the markets. There is evidence in the stimulus of some late deliveries, which reduced the quality of the meals delivered.
* The bicycles are more likely to break down, leading to increased costs and further delay of the arrival of the meals to customers. SD will lose many contracts, especially as a stronger competitor is entering the market. SD‘s highest market share/ power will be eroded.
disadvantages for an organisation of operating at high capacity
Workers might feel the pressure / tiredness / mistakes / demotivation, which can reduce productivity.
Machinery is more likely to break down, so production may be halted.
Higher maintenance costs, due to constant use.
Inability to respond to a sudden increase in demand, so potential customers may be lost.
calculate the current capacity utilization rate
FORMULA BOOKLET
Define the term productivity rate.
Productivity rate is a measure of how efficiently inputs can be converted to outputs
formula is the formula booklet
Innovation
Innovation is about putting a new idea or approach into action.
Product innovation features
Product innovation features could include:
CREATIVE INNOVATION
DEVELOPMENT OF A NEW PRODUCT
the development of a new, redesigned goods or services – creative innovation
quality improvements made to a product
the inclusion of new components, materials or desirable functions into an existing product – adaptive innovation.
It results from successful research and development which can be expensive, time consuming and risky
contingency plan
A contingency plan is a systematic way of preparing for the unexpected.
The aim is to reduce the possible impact of unexpected and unwanted events. If the definition relies on natural disasters, emergencies, crisis etc rather than “unexpected” only award [1] unless it is clear these are examples and that there is a “plan.”
explain the difference between crisis management and contingency planning
Contingency planning is a systemic way of preparing for the unexpected.
1. FORWARD LOOKING
2. PLANS FOR BROAD ISSUES
3. PLAN WILL LIKELY BE TESTED
WHILE
Crisis management is a process by which a business deals with a major event that has happened and poses a threat to the business
1. CURRENT LOOKING
2. PLAN FOR CURRENT EVENT
3. USES CONTINGENCY PLAN
Methods of quality management
quality circles
benchmarking
total quality management (TQM)
globalisation dfn/ads/dis
Globalisation is when countries are more open to trade of g/s across borders.
MNCs can migrate and bring
employment
tech improvements
governemtn tax
however
more mncs = pollution = decreased life expectancy
profits may not be reinvested but sent back out
METHODS of calculating break even point
- contribution method
- break even chart
HOW TO CALCULATE
1. contribution per unit
1. total contribution cost
1. profit
2. BREAK EVEN POINT
3. margin of safety
contribution per unit = $@ - VC@
Total contribution cost =
total revenue - total variable costs
$$$$$$ - vc
$$$$$$ x units sold
Profit = total contribution - total fixed costs
BEP = fixed costs divided by contribution
mos = co-beo
CONTRIBUTION
This calculates how many goods have to be sold to cover all costs.
