AOS3 - KK5 - Strategies to Improve Both the Efficiency and Effectiveness of Operations Related to Materials

Question 1

Materials management

Answer 1

The stratgey that manages the use, storage and delivery of materials to ensure that right amount of inouts are available when required in the operations system

Question 2

Types of materials

Answer 2

• forecasting
• master production scheduale
• materials requiring planning
• just in time

Question 3

Forecasting

Answer 3

using factors, such as historical data and seasonal fluctuations, to try and predict future demand for a business’s product

Forecasting allows a business to determine:
- What goods and services should be produced.
- How many should be produced (quantity)

Question 4

Advantages of forecasting

Answer 4

• Ensures the business has the right amount of materials on hand. ( meet consumer demand.)
• Can prevent overstocking of materials, which can reduce waste

Question 5

Disadvantages of forecasting

Answer 5

• Can be inaccurate – it is only a human prediction.
• Historical data does not guarantee an accurate prediction - Unforeseeable circumstances / events can occur

Question 6

Master production schedule (MPS)

Answer 6

a plan that describes what is to be produced, in what quantities, how and when

Question 7

Materials Requirement planning (MRP)

Answer 7

developing an itemised list of all materials involved in production to meet specified orders

Question 8

Advantages of MRP and MPS

Answer 8

• Both strategies can allow a business to avoid overproducing or underproducing
• Promotes a continuous flow in production – no need to wait for materials to arrive.

Question 9

Disadvantages of MPS and MRP

Answer 9

• Both rely on accurate information – if the forecast is inaccurate, it is likely errors will occur.
• If using MPS and MRP software, it can become an expensive for the business. (employees need training)

Question 10

Just In Time

Answer 10

A strategy that ensures the right amount of material inputs arrive only as they are needed in the operations process

Question 11

Advantages of Just In Time

Answer 11

• Holding less stock = storage costs are reduced.
• Reduces the risk of any waste occurring in storage as less inventory will be lost or damaged.

Question 12

Disadvantages of Just In Time

Answer 12

• Supplier deliveries must be reliable – failing to deliver on time can hold up production.
• Can increase transportation costs as orders are arriving in smaller quantities more regularly.
• Doesn’t cater for unexpected consumer demand