Chapter 9: Production/Operations Management

Question 1

What is production management and what is the process of creating value?

Answer 1

Production management refers to the management of processes that create value
In order to satisfy the needs and/or wants of consumers.

This process of “creating value” is when goods are produced.

Question 2

What does the production function form a part of?

Answer 2

The production function forms part of the internal supply chain of the business.

Question 3

Purchasing Function:

Answer 3

Procurement of the resources that are needed by the production function (and all other departments).

Question 4

Production Function:

Answer 4

Procurement of the resources that are needed by the production function.

Question 5

Marketing Function:

Answer 5

Goods services produced by the Production function are marketed to the relevant target market.

Question 6

Factors of production?

Answer 6

-Land / Raw Materials
-Capital
-Entrepreneurship
-Labour (Human Capital)
-Information Technology: Information technology refers to the use of technology
to satisfy customer needs. This could be the use of new machines, online shops, online banking, etc.

Question 7

Production Manager:

Answer 7

It is the responsibility of the Production manager to ensure that all systems / procedures that are part of the supply chain
are well planned, organized, converted into action and control.

Question 8

Tasks of the production function:

Transformation:

Answer 8

The manager needs to ensure that the correct, facilities, labour and capital are in place to transform inputs into goods / services.

Question 9

Input:

Answer 9

The business will need to ensure that the correct raw materials, know-how, capital, information and quality control mechanisms etc. are in place before the business starts to produce goods/services.

Question 10

Output:

Answer 10

It is important that the output (goods / services) being produced meets the predetermined standards and quality criteria.

Question 11

Acceptance:

Answer 11

Goods / services that meet the necessary quality standards are finally sold to or accepted by the customers through marketing activities.

Question 12

Specific tasks

Long-term tasks:

Answer 12

these decisions are considered to be long-term because research, consultation and discussions take place before these decisions are made.

Examples of these types of decisions are: choosing the factory premise, decisions about the factory layout, deciding on a production system.

Question 13

Medium-term tasks:

Answer 13

these decisions are made over a medium-term and could be adapted quarterly or even monthly if need be.

Examples of such decisions are: determining the production budget and production quantities, safety measures, materials management and machine maintenance.

Question 14

Short-term tasks:

Answer 14

these are decisions that are made on a day-to-day basis regarding the input transformation and output of goods and services.

For example: These tasks may include the daily work-plan that is drafted to ensure that the correct quantity of goods is produced as well as the implementation of quality control.

Question 15

Choosing the factory premises (location)

Location Elements:

Answer 15

-Proximity to the resource vs market
-Integration with business “partners”
-Availability of labour and skills
-Availability of services
-Availability of transport
-Room for expansion
-Special grants
-Site costs
-Regional regulations

Question 16

Special grants:

Answer 16

The government sometimes offers special grants
industries to certain locations in order to stimulate
economic growth in those areas.

Question 17

Site costs:

Answer 17

The business will have to consider the cost
implications (cost to level the ground, of laying pipelines, rates and taxes, etc.) of setting up in historical land claims

Question 18

Regional regulations:

Answer 18

It is important that the business checks that the location has no previous violations (Such as environmental dangers) or that the location has no historical land claims.

Question 19

Effective factory layout will promote:

Answer 19

Productivity
Safety
Quality of goods/ services

Question 20

Criteria for Factory Layout:

Answer 20

Flexibility: A good layout is one that can easily be modified if need be. However, the bigger the machines, the more difficult it becomes to move them around.

Distance
Coordination
Best use of space
Visibility
Coordination
Safety

Handling: The handling of the raw material and final goods should be reduced to a minimum, to avoid damaging the raw material and/or product (lesser quality)

Question 21

Advantages of a proper factory layout:

Erom the employee’s point of view:

Answer 21

Higher productivity has the potential benefit of higher wages.

Question 22

From the business’s point of view:

Answer 22

If the production process runs smoothly, more goods will be produced and this may
lead to a higher turnover (more sales).

Question 23

Deciding on a production system

What do production systems describe?

Answer 23

Production systems describe the process of Input processed and Output

Question 24

What are the 2 types of production systems?

Answer 24

There are two basic types of production systems, namely continuous production and
interrupted production.

Mass production is an example of a continuous production system

Batch production and jobbing are examples of interrupted production systems.

Question 25

Production Systems

Mass Production:

Answer 25

When products are produced in large quantities

Question 26

Batch Production:

Answer 26

Batch production refers to a production system that falls between mass production and jobbing.

Large quantities of similar products are made in batches, for example, producing a dozen or a hundred of the same product (products are made in batches and one batch has to be completed before a next batch is started).

Question 27

Jobbing Production:

Answer 27

An example of a goods being produced using this system is an individualized wedding dress or the production of capital goods, such as building a house.

Jobbing refers to a system where one job is
finished before a new one is started.

Question 28

Combination Production:

Answer 28

An example of a combination production system is when a customer chooses the interior colour and other add-ons for his/ her car.

The body of the vehicle is still mass produced, the colours are still done in batches, but the interior is personalised.

Question 29

The importance of product specifications:

Answer 29

The suppliers of the materials will know exactly what type and quality of material are required.

It is easier to manage the control during the delivery of the raw materials (has to meet predetermined standards), as well as during
the manufacturing process.

Employees know the expectations and aim to perform accordingly. This may lead to less wastage, better productivity and ultimately
more profits for the business.

The customer knows what level of product quality can be expected.

Question 30

Medium-term decisions / tasks:

Determining the production budget

Answer 30

Yea

Question 31

Determining production quantities:

Answer 31

Some businesses may consider large-scale production, while others may prefer small-scale production.

Question 31

Materials management (stock control):

Answer 31

Stock control refers to the management of the
inventories that are needed to manufacture product (and/or service).

Question 32

Safety measures:

Answer 32

Safety refers to any risk that is associated with the health and safety of employees.

Question 33

Types of maintenance that could be carried out:

Corrective maintenance or remedial maintenance:

Answer 33

Takes place when the machine
has already broken down and is then repaired.

Question 34

Preventive maintenance:

Answer 34

is done to forestall machine breakdowns thus averting lost production time. As soon as a problem arises, the machine should be serviced.

Question 35

Conditional maintenance:

Answer 35

is routine by nature as the machines are serviced at
regular intervals.

Question 36

Benefits of Maintenance:

Answer 36

Increased Lifespan of Equipment
Improved Safety
Lower Operation Costs
Reliability of Production

Question 37

Short-term decisions / tasks:

The work plan:

Answer 37

The production manager has to determine the most effective sequence that will be followed as the product passes through the production process.

Allocating the correct worker to the correct workstation will improve productivity. The synchronization of all components of the production process is important to avoid bottlenecks.

Question 38

The implementation of quality control:

Answer 38

Quality control is important because in order to satisfy the needs of consumers, the
business has to supply a product that meets the expected / required quality standards.

Question 39

Reasons to perform quality control:

Answer 39

Quality control will help to encourage workers to deliver good quality products.

Quality control can serve as a basis for remuneration decisions - good quality products will be rewarded.

Retailers know they will receive a good quality product to sell in their shops (higher turnover
for them).

Continuous quality control will help to eliminate problems in the production process and thereby reduce production cost by eliminating poor products.