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Buisness > 5.6 - Production Planning > Flashcards

5.6 - Production Planning Flashcards

1
Q

Define supply chain

A

A series of processes involved in production and distribution of goods to the end customer and consumer

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2
Q

Define supply chain management

A

Refers to dealing with the flow of goods in the supply chain in the most efficient way

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3
Q

What are the 2 types of supply chain

A
  • local supply chain
  • global supply chain
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4
Q

What is the scale of a local supply chain

A

Operates on a smaller level. The distance between supplier, producers and distributors is short. They cover a region

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5
Q

What is an example of a local supply chain

A

Farmer selling local produce

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6
Q

What are the advantages and disadvantages of a local supply chain

A

Ad - benefit from local community
Dis - whats available on local scale is limited compared to global scale

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7
Q

What is the scale of a global supply chain

A

Operates on a larger scale. The distance between suppliers, producers and distributors is long. These are transnational company’s

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8
Q

What is an example of a company which works on a global scale

A

Apple

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9
Q

What re the advantges and disadvantages of a global supply chain

A

Ad - costs are minimal as organisation are able to find location with the lowest wages and costs.
Dis - high risk, organisations have to rely on suppliers, manufactures and distributors from different countries with different legislations and cultures and with different levels of stability

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10
Q

Define stock/invatory

A

Raw materials, components, WIP and finished goods that are healed by a organisation

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11
Q

Define buffer stock

A

Inventory that is kept JIC for demand fluctuations or supply chain problems

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12
Q

Define JIC

A

Stock control system that holds buffer stock

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13
Q

Define JIT

A

Stock control system that aims for no buffer stock

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14
Q

What are the features of JIC

A
  • hold buffer stock
  • can use purchasing EOS (buy more get discount)
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15
Q

What are the positives and negatives of buffer stock

A

Dis - higher storage cost
Ad - demand fluctuations has minimal impact

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16
Q

What are the effects of JIC on working capital and BEQ

A
  • negative effect on working capital because cash is tied up in stock
  • higher BEQ becuase of higher costs
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17
Q

What are the features of JIT

A
  • no buffer stock
  • replys on developing close relationship with supplier
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18
Q

What are the advantages and disadvantages of JIT

A
  • low storage costs
  • demand fluctuation has significant impact
19
Q

What are the effects of JIT on working capital and BEQ

A
  • positive effects on working capital as cash is free for daily operations
  • low BEQ becuase lower costs
20
Q

What are the 7 aspects of a stock control chart

A
  1. Max stock level
  2. Re order level
    3, min stock level
  3. Buffer stock
  4. Re order quantity (min-max)
  5. Lead time (point where you need to place order for more)
  6. Delivery of stock
21
Q

Define lead time

A

Period between ordering new stock and receiving it

22
Q

Define buffer stock

A

Min amount of stock

23
Q

Define re order level

A

The level of stock at which the new order is placed

24
Q

Define re order quantity

A

The amount of stock ordered

25
Q

What are the 6 different rates

A
  1. Capital utilisation rate
  2. Defect rate
  3. Productivity rate
  4. Labour productivity rate
  5. Capital productivity rate
  6. Operating leverage
26
Q

Define capital utilisation

A

Am measure of existing output relative to productive capacity

27
Q

What is the formula for capital utilisation

A

= actual output / productive capacity x 100

28
Q

Define defect rate

A

Problem that hinder usability

29
Q

What is the formula for defect rate

A

= number of defect units / total output x 100

30
Q

Define productivity rate

A

Measure of efficiency of production

31
Q

What is the formula for productivity rate

A

= total output/total input
General formula

32
Q

Define labour productivity

A

Measure of workers efficacy

33
Q

what is the formula for labour productivity

A

Total outputs / hours worked

34
Q

Define capital productivity

A

Measure of efficiency of organisations capital, especially working capital

35
Q

What is the formula for capital productivity

A

= current assets - current liabilities

36
Q

Define operating leverage

A

Measure of effect of fixed costs on profit given different sales levels

37
Q

What is the formula for operating leverage

A
  • uses same data as break even
    Fixed costs, variable costs, contribution
  • unit contribution = P - AVC
    Total contribution = (P-AVC)xQ
  • operating leverage = total contribution/profit
38
Q

After you have the operating leverage what do you have to do

A

Calculate change in profits
- change in profits = change in sales% x operating leverage

39
Q

What are the positives and negatives of high operating leverage

A

Pos - more sales = more profits
Neg - high foxed costs, high risk is sales are low

40
Q

What are the positives and negatives of low operating leverage

A

Pos - low fixed costs, low risk if sales are low
Neg - more sales don’t have much effect on profit

41
Q

Define make or buy desition

A

A choice between purchasing from supplier and manufacturing on its own

42
Q

What are the 2 factors of make and buy desision

A

Qualitative factors : suppliers per and reliability, product quality, ethics
Quantative factors : break even analysis, investment appraisal, budgets, costs, cost to buy and cost to make

43
Q

Define cost to buy and give its formula

A
  • cost of purchasing from supplier
  • CTB = PXQ
44
Q

Define cost to make and give its formula

A
  • cost of purchasing from supplier
  • CTB=(AVCxQ) + TFC

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