Business Operations

Question 1

Overstocking

Answer 1

Supplies could go out of date is stored for too long

social factors mean stock could go out of fashion quickly

too many supplies means a risk of theft

money is tied up in stock

business has to pay stockholidng costs like security

Question 2

understocking

Answer 2

business may run out of stock meaning production and selling has to stop

business will not benefit from bulk buying discounts

increase in delivery costs due to small orders

no stock could result in bad reputation and no return customers

Question 3

lead time

Answer 3

time taken between an order placed and it arriving

Question 4

features of inventory control diagram

Answer 4

maximum stock level
minimum stock level
re-order level
re-order quantity 
lead time

Question 5

benefits of warehousing

Answer 5

secures items from theft

offers suitable storage - well lit, dry

allows range of products to be held to suit demand

Question 6

Centralised stock - A&D

Answer 6

A- easier to control
- cheaper to store in one place than lots of small warehouses
- can store massive amounts of stock, benefiting economies of sale
D- specialist staff need employed, adds to costs
- specialist equipment needs bought and maintained
- inventory has to be delivered to each department costing transport

Question 7

Dencentralised stock - A&D

Answer 7

A- inventory is always close when needed for production or sales
- less chance of stock deteriorating
D- security not as good, can lead to theft
- space for storage for each department is needed

Question 8

Road transport - A&D

Answer 8

A- generally quick and efficient
- allows door to door delivery 24 hours a day
D- roadworks and bad weather can delay deliveries
- fuel costs can be expensive

Question 9

Rail transport - A&D

Answer 9

A- useful for heavy goods
- more environmentally friendly
D- rail terminals not final destination, road costs added
- not suitable for rural locations

Question 10

Air transport - A&D

Answer 10

A- ideal for long distance and remote locations
-overseas deliveries are fast
D-often more expensive
- airport not final destination, other costs added

Question 11

Sea transport - A&D

Answer 11

A- useful for heavy bulky products
D- dock is not final destination, other costs added
- slower method meaning longer delivery times

Question 12

Pipeline transport - A&D

Answer 12

A- services can be distributed directly to customers location
- infrastructure is being improved each year
D- high installation costs
- rural areas at a disadvantage as infrastructure is harder to install

Question 13

JUST IN TIME advantages

Answer 13

A- allows no wastage as all stock is used

• no money is tied up in stock meaning good cashflow
• no warehouse is needed reducing costs
• business is more responsive to changing external factors

Question 14

JUST IN TIME disadvantages

Answer 14

D - if deliveries are late business will face under stocking consequences

• requires good relationship with suppliers which can take time
• no room for error in production

Question 15

Job Production

Answer 15

producing a single one-off product
A- higher prices can be charged
- products can match customer requirements
- employees more motivated as each task is different
D- high wages for skilled staff
- high cost of products may put customers off
- different materials need ordered for different products, lots of little orders meaning no bulk buying discounts

Question 16

Batch Production

Answer 16

large numbers of same product being made in stages
A- can be adapted to meet customer requirements
- less need for highly skilled employees
- materials can be bought with bulk buying discounts
D- one mistake can ruin whole batch
- employees less motivated as tasks become repetitive
- high stock levels needed, consequences of overstocking

Question 17

Flow Production

Answer 17

continuous production of identical products
A- huge amount of products are made leading to high sales
- often capital intensive leading to consistent quality
- workers specialise in routine increasing speed and accuracy
D- products cannot be altered
- employees are demotivated due to repetition
- massive amounts of investment are needed for equipment and tools

Question 18

Labour Intensive A&D

Answer 18

A- good if labour supply is cheap
- employee motivation high as using their skills
- good for small business that cannot afford machinery
D- may limit scale of production
- if staff are ill production may have to stop

Question 19

Capital Intensive A&D

Answer 19

A- consistency and quality is more accurate
- production is continuous
D- set up costs for machinery are high
- employee motivation low

Question 20

Automation

Answer 20

when machinery has replaced the need for human labour
A- robots can work to a very high level of accuracy
- production time is quick and can be repeated constantly without error
- robots don’t make mistakes
D- lack of human touch can lead to lack of personality and creativity
- can be very expensive

Question 21

Mechanism

Answer 21

machinery is used t help labour for complete its work
A- human element still exists improving creativity
- production issues can be fixed quickly by workers
D- workers need training before using equipment
- replacing labour with robots will demotivate employees

Question 22

CAD - computer aided design

Answer 22

technical drawings used during the design stage
A- much greater accuracy in the drawings
- 3D visuals allows designers to see flaws quickly saving time and money
D- equipment and software very expensive
- training staff to use equipment is required

Question 23

CAM - computer aided manufacture

Answer 23

when computers control the mechanised systems and robots are used in manufacturing
A- produces consistent and highly accurate results
- can run 24/7
D- cost for equipment is high
- staff need trained

Question 24

Benefits of achieving the right quality

Answer 24

• greater customer satisfaction
• improved image and reputation
• less time spent on repairing products

Question 25

Quality Control

Answer 25

quality inspectors employed to check the accuracy of completed work
A- prevents faulty products given to customers
- use of a specialist is a more secure system
D- replacing responsibility of quality failures to inspectors can cause employees to slack
- costs of paying for quality inspectors wages

Question 26

Benchmarking

Answer 26

comparing your business quality to a competitors to try improve it
A- if successful product will be as good as best on market
- saves business time trying to develop their own way to ensure quality
D- can be hard getting information about competitors quality methods
- business may only ever be as good as the benchmark, it may improve and leave them behind

Question 27

Quality Circles

Answer 27

a group of employees discussing problems discussing problems in production process and ways to improve quality
A- employees will be motivated as they get a say in decision making
- managers will get valuable information
D- employees meet during work hours meaning production time is lost
- employees may need training to join quality circles costing money

Question 28

Ethically aware A&D

Answer 28

A- awards can be granted for being ethical which can be used in promotion
- can attract more customers and good quality staff
D- inspections are needed to ensure standards are met, time consuming
- decision making could take longer as not all decision are ethical

Question 29

Environmentally friendly A&D

Answer 29

A- organisation is hopefully preserving the environment for future
- will improve reputation
- awards can be given which can be used for promotion
- renewable energies can save costs in long run
D- can be expensive short term
- can be time consuming

Question 30

Use of technology

Answer 30

• internet used to purchase stock
• automated systems can track deliveries
• computerised devices can be used to find and check stock