Business: Unit 4-Operations Department Flashcards
operations department
takes inputs and changes them into outputs for customer use
productivity(formula)
output
_______
input
productivity of labour(formula)
no of hours/output
_______________
no of employees
cost per unit
total cost
________
total output
buffer inventory(definition, 3 adv, 4 disadv)
inventory held to deal with uncertainty in customer demand and deliveries of supplies
+ can easily respond to customer’s wants
+might win customers when competition is low on cost
+continuity of production process
- costs money
- may become out of date
- wastage
- selling out-of-date stock cheaper
lean production
techniques used by businesses to decrease waste therefore increasing efficiency
types of waste
overproduction waiting motion defects over-processing unnecessary invention
benefits of lean production(3)
- higher labour productivity
- less stock needed
- improved health and safety
Kaizen(definition, 3 advantages)
philosophy where emploees work together to achieve regular improvements
+increased productivity
+reduced amount of space needed
+work-in-progress is reduced
just-in-time(definition, 2 +,2-)
reducing/eliminating the need to hold inventories of raw materials and unsold inventories
+quick selling->better cashflow
+reducing inventory costs
- suppliers must be on time
- unexpected high orders
cell production
production line is divided into separate units each maing a part of the finished product
JOB PRODUCTION(definition, 4 +, 5 -)
a single product is made at a time, products are made specifically to order
+suitable for one off’s and personalised services
+more varied work for workers->increased motivation
-> greater job satisfaction
+flexible and high quality goods/services->higher prices
+product meet exact customer requirement
- skilled labour raises costs
- mistakes might be expensive to correct
- materials might have to be specially purchased
- production takes a long time
BATCH PRODUCTION(definition, 4+,3-)
a quantity of a product is produced, than a quantity of a different product is produced
+ flexible way of working
+variety to workers
+variety of products
+if one machine breaks down, production can continue
- expensive-more space needed as products have to be moved to new production stage
- machines have to be reset ->delay
- warehouse space
MASS PRODUCTION(definition,5 +, 4 -)
large quantities of products are produced in a continuous process
+high output
+cost of making each item is kept low by high sales
+may benefit from economies of scale
+automated production
+no need to move goods around
- boring for workers
- storage requirements-> high costs of inventories
- initial capital cost is very high
- if 1 machine breaks down, the whole production line stops
technology imprivement(3 e.g, 5 +, 4-)
automation, mechanisation, EPOS
\+production increases \+new types of jobs \+better quality \+quicker decision making \+quicker communication
- unemployment rises
- expensive investment
- employees unhappy with changes
- outdating technology
fixed costs
costs whcih do not vary with the number of items sold/produced
variable costs
costs which vary with the number of items sold/produced
total costs(f)
total fixed costs+total variable costs
average cost(f)
total cost of production
____________________
total output
break-even analysis(f)
total fixed costs
____________
price-variable costs
safety margin(f)
current output-break-even output
using cost data helps with (4)
- setting/changing prices
- deciding wether to stop production
- deciding on the best location
- deciding on future investments
advantages(using cost data)
+expected profit/loss at any level of output
+impact on decisions of profit/loss
+calculate safety margin
limitations(using cost data)
- assumes all goods are sold
- assumes scale of production doesn’t change
- assumes costs&revenue are linear
- only calculates break-even point of production
