Business - Operations Flashcards
What are a businesses operational objectives?
costs, quality, speed of response and flexibility, dependability, environmental objectives and added value
What does labour intensive mean?
when labour costs outweigh capital costs of a business
how do you measure efficiency of a business?
labor productivity, unit costs, capacity and capacity utilisation.
What is the definition of capacity?
the maximum total level of output or production that a business can produce in a given time period
what is the formula for capacity (not capacity utilization)
capacity output per annum or month/ maximum possible output per annum or month X100
What are some methods of increasing capacity utilisation?
job rotation, good working conditions, piece-rate-pay, invest in new technology, training or increase the amount of working hours
what is the definition of unit cost?
the cost of producing one unit of output
what is the formula for calculating unit cost?
total costs(£)/ units of output (volume)
why is it important to have spare capacity?
allows you to plan maintenance which is very important for a capital intensive business.
what is the optimum capacity level?
93%
What are the advantages of spare capacity?
less pressure on employees, more time for maintenance and repair, improvements can be planned and you can cope with sudden increases in demand.
what are the disadvantages of having spare capacity?
higher proportion of fixed costs per unit, negative image of being unsuccessful, less work for employees so they become bored or demoralized
What is lean production?
an approach to production that aims to minimise waste, which can reduce costs.
what are the aims of lean production?
zero delay, zero stocks, zero mistakes, zero waiting and zero accidents
What are the advantages of using JIT?
reduced waste, don’t have to store much stock, you can customise the products, increased efficiency and smaller warehouse space needed
What are the disadvantages of using JIT?
cant handle surges in demand, reliant on suppliers, procurement process may take longer and there are reduced options for dealing
What is the definition of Kaizen?
continuous improvement, an approach to production that aims to achieve change from a series of small steps
What are the benefits of Kaizen?
higher capacity utilization, less waste, more energy efficient, reduced risk, better customer experience and more accurate information.
What are the benefits of using technology in production?
better working conditions for staff, lower staff costs, improved quality, automation, more efficient and you can have it work longer.
What is cell production?
organising production around teams instead of a production line. The production is divided into a series of different stages which are undertaken by teams or cells.
advantages of cell production?
within the cells individuals can use their individual skills, employees are motivated as they have control aver their work, a cell can refuse a product form a previous cell if its bad quality
What are the disadvantages of using cell production?
heavy investment costs for new machinery, cells can work at different speeds which can cause conflict and tension, and output may be lower than a flow production system
What does economies of scale mean?
a proportionate saving in costs gained by an increased level of production
What does using technology include?
Robotics, automation, communication, design
