Analysing Operational Performance

Question 1

What is labour productivity

Answer 1

This measures the output per employee in a given period.

Question 2

How does operations managers influence labour productivity

Answer 2

May influence the way they train and organise employees and how they reward staff.

Question 3

What is unit (average) costs

Answer 3

This measures the cost per unit (sometimes called the average costs)

Question 4

How do operations managers influence the unit costs

Answer 4

They can consider what supplies to use, what resources to use, how to make the operations process more effective and how to reduce waste.

Question 5

What is capacity

Answer 5

The capacity of a business measures the maximum it can produce given its existing resources.

Question 6

What is capacity utilisation

Answer 6

This measures existing output as a percentage of the maximum possible output.

Question 7

What does high and low capacity utilisation mean

Answer 7

• The higher the capacity utilisation the more resources are being fully utilised.
• A low capacity utilisation may be a concern to managers as it suggests that demand is relatively low and the cost per unit is likely to be high.