Chapter 23: The Nature Of Operations

Question 1

Define added value

Answer 1

Added value: the difference between the cost of purchasing raw materials and the price the finished goods are sold for – this is the same as creating value.

Question 2

Define intellectual capital

Answer 2

Intellectual capital: intangible capital of a business that includes human capital (well trained and knowledgeable employees), structural capital (databases and information systems) and relational captial (good links with supplier and customers).

Question 3

Define production

Answer 3

Production: converting inputs into outputs.

Question 4

Define level of production

Answer 4

Level of production: the number of units produced
during a time period.

Question 5

Define productivity

Answer 5

Productivity: the ratio of outputs to inputs during production, e.g. output per worker per time period.

Question 6

Define efficiency

Answer 6

Efficiency: producing output at the highest ratio of output to input.

Question 7

Define effectiveness

Answer 7

Effectiveness: meeting the objectives of the enterprise by using inputs productively to meet customers’ needs.

Question 8

Define Labour intensive

Answer 8

Labour intensive: involving a high level of labour input compared with capital equipment.

Question 9

Define capital intensive

Answer 9

Capital intensive: involving a high quantity of capital equipment compared with labour input.

Question 10

Define transformational process

Answer 10

The transformational process is the way a business converts and adds value to the factors of production into finished goods that meet customer needs

Question 11

Define sustainability of operations

Answer 11

Sustainability of operations is when a business minimizes harm to the environment and conserves natural resources eg by recycling materials or reducing energy use and carbon emissions