Chapter 33-41 Operations

Question 1

Job production

Answer 1

Single, unique items are made one at a time.

Question 2

Batch production

Answer 2

Limited number of identical products are made in groups

Question 3

Flow or mass production

Answer 3

A continuous process where large volumes of identical products flow from one stage of
production to the next on a production line.

Question 4

Labour productivity

Answer 4

A measurement of the output per worker that shows how efficient workers in a business are at turning production inputs into outputs.

Question 5

Rationalisation

Answer 5

Concentrating on core products and disposing of those products/services/assets/employees that are not seen as profitable.

Question 6

Computer modelling

Answer 6

Computers which are programmed to predict future outcomes by testing a range of ‘whatif’ scenarios in order to improve product safety, performance & efficiency

Question 7

Computer aided design (CAD)

Answer 7

An interactive computer system which is capable of generating, storing and using
computer graphics to assist design engineers to create images of new products.

Question 8

Computer aided manufacturing

Answer 8

Using programmed computers and robots to produce goods

Question 9

Lean production

Answer 9

The reduction and removal of waste from the production process, which will result in
increased productivity and reduced costs

Question 10

JIT

Answer 10

Parts, raw materials and components are received and products are made only when
there is demand for the parts and demand for the products

Question 11

Kaizen

Answer 11

Continuous improvement. Be continually making small incremental steps in the
improvement of quality, design and waste reduction.

Question 12

Cell production

Answer 12

Groups of workers who are multi-skilled and can be self-managing, where each group is
responsible for completing a task, and members are expected to play a role in improving quality and flexibility in the production process

Question 13

Time based management

Answer 13

Process that focus on time as a key business resource, including concepts such as just-intime, Computer Aided Design, Computer Aided Manufacture, Critical Path Analysis and Simultaneous Engineering

Question 14

Quality assurance

Answer 14

Checking quality throughout the production process

Question 15

Quality control

Answer 15

Checking quality at the end of the production line through inspections and sampling.

Question 16

Benchmarking

Answer 16

Setting standards of quality and output which are based on the best that competitors are achieving

Question 17

Total quality management

Answer 17

TQM – A total process of creating quality through continuous improvement in all stages of production

Question 18

Quality chains

Answer 18

Where the next person in the production process is treated as a customer and customer satisfaction is the objective

Question 19

Economies of scale

Answer 19

The reduction in average costs of production that occur as output increases

Question 20

Internal economies of scale

Answer 20

Reductions in the average cost per unit of output as a result of increasing internal
efficiencies within a business.

Question 21

Purchasing economies

Answer 21

As output increases, so can the size of orders for raw materials, which may result in bulk
discounts being given which therefore reduces the average cost of production.

Question 22

Technical economies

Answer 22

As a business grows it can afford to purchase the latest equipment which will result in
increased efficiency and productivity, reducing average costs of production.

Question 23

Financial economies (internal)

Answer 23

As a business grows it will have access to a wider range of finance, and they have more
collateral to offer lenders as security – reducing the risk. As a result they can often
negotiate more favourable rates of interest and thus lower the average cost of borrowing.

Question 24

Managerial economies

Answer 24

As a business grows it can employ specialists who can increase efficiency of production,
marketing or purchasing thereby reducing the average costs of production.

Question 25

Marketing economies

Answer 25

As a business grows each pound spent on advertising will have greater benefit as the cost of the advert can be spread across a larger number of products thereby reducing the average cost of marketing

Question 26

External economies of scale

Answer 26

The advantages of scale that benefit a whole industry and not just an individual business.
E.g. Educational & supplier

Question 27

Supplier economies

Answer 27

A network of suppliers may be attracted to an area where a particular industry is growing. If the suppliers are in competition with each other this may reduce buying costs and
improve services like Just-in-time

Question 28

Educational economies

Answer 28

Local colleges will set up training schemes suited to the largest employer’s needs providing an available pool of skilled labour, thereby reducing recruitment and training costs for all businesses in the industry

Question 29

Financial economies (external)

Answer 29

financial institutions providing services that may be particularly geared towards a particular industry.

Question 30

Diseconomies of scale

Answer 30

The factors that cause higher costs per unit of output when the scale of a business
continues to increase causing inefficiency in large organisations. E.g. Coordination,
communication & motivation issues