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Business > Decision Making to Improve Operational Decision Making > Flashcards

Decision Making to Improve Operational Decision Making Flashcards

1
Q

Factors of Production

A

Land

Labour

Capital

Enterprise

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2
Q

How does Quality achieve Customer Satisfaction?

A

-Brand image
-Reputation
-Appearance
-Reliability
-Functions
-Cost of ownership e.g. repairs
-Exclusiveness

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3
Q

Quality Control

A

Inspectors check every stage.

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4
Q

Cost of Holding Inventories

A

-Cost of storage
-Interest Costs
-Obsolescence risk
-Stock out costs

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5
Q

Kaizen

A

‘Continuous improvement’

Policy of implementing small incremental changes

Creates a quality culture

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6
Q

TQM

A

Total Quality Management

‘Getting it right first time’

Teams responsible for their quality

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7
Q

Key Reasons to Hold Inventory

A

-Enable production to take their place
-Satisfy customer demand
-Precaution against delays from suppliers
-Allow efficient production
-Allow for seasonal changes
-Provide a buffer between production process

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8
Q

Advantages of Customer Satisfaction

A

-Impact sales
-Create USP
-Charge higher prices
-Cost reductions

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9
Q

Achieving High Labour Productivity

A

Getting the workforce to be more productive is not an easy task and influenced by:
-Quality (and extent) of machinery
-Skills, motivation and ability of workforce
-Methods of production used
-Reliability of raw materials and suppliers

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10
Q

Influences on Amount of Inventory Held

A

-Need to satisfy demand (failure is costly, could be seasonal)
-Need to manage working capital (holding ties up cash and opportunity cost)
-Risk of losing value/inventory (longer stocks are held, greater risk they cannot be used or sold)

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11
Q

Factors of Affecting when/how much Inventory to Re-order

A

-Lead-time from supplier (higher lead time may require higher re-order level)
-Implications of running out (stock-outs) (if damaging then high re-order level)
-Demand for the product (higher demand, higher re-order levels)

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12
Q

Formula for Unit Cost

A

Total costs/output

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13
Q

Ways of Reducing Capacity

A

-Selling off fixed costs
-Changing to shorter working weeks/days
-Laying off workers
-Transferring resources to another area

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14
Q

Considerations of Choosing Suppliers

A

-Good prices
-Payment terms
-Quality
-Capacity of supplier
-Reliability
-Flexibility

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15
Q

Invention and Innovation

A

Invention: formulation of new ideas for products or processes

Innovation: practical application of new inventions into marketable products or services

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16
Q

Types of Innovation

A

Product involution: launching new or improved products (or services) on to the market.

Process Innovation: finding better or more efficient ways of producing existing products, or delivering existing services.

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17
Q

Benefits of Product Innovation

A

-‘First mover advantage’
-Higher profits and profitability
-Added value
-Opportunity to build early customer loyalty
-Enhanced reputation as an innovative company
-Public relations e.g. news coverage
-Increased market share

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18
Q

Methods of Lean Production

A

Time Based Management

Simultaneous Engineering

Just In Time Production

Cell Production

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19
Q

Quality

A

A product or service is of good quality if it meets the needs of expectations of the customer.

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20
Q

Advantages of Low Inventory Levels

A

-Lower inventory holding costs e.g. storage
-Lower risk of obsolescence inventory
-Capital can be used elsewhere in the business
-Consistent with operating ‘lean’

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21
Q

Benefits of Mass Customisation

A

-Higher customer retention (as few options and tailored)
-Fewer unfinished goods need to be stored, reducing costs
-Quick, efficient production process
-Higher price point for customised products, higher profits
-More flexible software and systems to handle highly customised orders

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22
Q

Drawbacks of Mass Customisation

A

-Impossible to build up stock ahead of time
-Forecasting trends in sales more difficult - wide range of options
-Difficult to plan for surge in product demand
-Affects flow of supply chains
-Wait time from order to shipment to in-hand increases
-Increased costs to maintain a variety of machinery that can produce different colours, shapes, etc

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23
Q

Advantages of High Inventory Levels

A

-Production fully supplied (no delays)
-Potential for lower unit costs by ordering in bulk/high quantities
-Better able to handle unexpected changes in demand

24
Q

Ways of Increasing Capacity

A

-Extending factories
-Overtime or longer hours
-Hiring new staff
-Flexible workforce
-Sub-contracting/outsourcing

25
Q

External Operational Objectives

A

-Competitor efficiency flexibility
-Technological change
-Economic environment
-Legal and environmental change

26
Q

Advantages and Disadvantages of Produce to Order

A

Advantages:
-Customer satisfaction
-Customer loyalty
-Higher prices

Disadvantages
-Fluctuations of demand
-Higher cost

27
Q

Disadvantages of Customer Satisfaction

A

-Costs increased
-Training needed
-Disrupting production

28
Q

Disadvantages of Improving Efficiency

A

-Capital needed
-Train workforce
-Higher wages

29
Q

Operational Objectives

A

-Costs
-Quality
-Measuring quality
-Speed of response
-Flexibility
-Dependability
-Environmental
-Added value

30
Q

Internal Operational Objectives

A

-Corporate objectives
-Marketing issues
-Finance
-Human Resources

31
Q

Benefits of Process Innovation

A

-Reduced costs
-Improved quality
-More responsive customer service
-Greater flexibility
-Higher profits

32
Q

Disadvantages of Labour Productivity

A

-To increase may have to spend money on training
-Increased investment in machinery as well as people i.e. to work more efficiently may need better equipment

33
Q

Causes of Spare Capacity

A

-New competitors or new products entering the market mean a fall in demand for existing products
-Fall in demand as change in fashion/taste
-Unsuccessful marketing
-Seasonal demand
-Over-investment in fixed assets
-A merger or takeover leading to duplication of resources

34
Q

Just In Time Advantages and Disadvantages

A

Advantages:
-Increases motivation
-Reduces costs

Disadvantages:
-Bulk-buying discounts
-Halt to production line expensive

35
Q

Advantages of Improving Efficiency

A

-Reduces costs
-Reduces waste
-Improves quality
-Financial monitoring

36
Q

Effective Lean Production Requires..

A

-Good relations with suppliers
-Committed, skilled and motivated employees
-Culture of quality assurance; continuous improvement and willingness to embrace change
-Trust between management and employees

37
Q

Increasing Capacity

A

A major decision and would have to fit in with corporate objectives.

Businesses need to ensure there’s a future demand for the products as well as available finance.

38
Q

Examples of Waste

A

-Over-production: leads to excess inventories which may be unsalable
-Waiting time (idle)
-Transport (moving unnecessarily)
-Stocks, acceptable buffer, not excessive
-Motion: worker appears busy but not adding value
-Defects: doesn’t meet required quality

39
Q

Formula for Labour Productivity

A

Output per period/number of employees per period

40
Q

What is Capacity?

A

The maximum level of output.

41
Q

Advantages of Labour Productivity

A

-Efficient use of inputs = fewer employees needed
-Increasing appeal to stakeholders gives:
-> Shareholders a higher ROCE (return on capital employed)
-> Employees higher wages

42
Q

Labour Intensive

A

Method of production that uses high levels of people; labour is expensive in the UK.

When labour costs outweigh capital costs of a business.

43
Q

Capital Intensive

A

Method of production that is highly automated, therefore needs large amounts of investment.

44
Q

Advantages and Disadvantages of Quality Control

A

Advantages:
-Stops faulty goods reaching consumer

Disadvantages
-No team responsibility

45
Q

Lean Production

A

An approach to management that focuses on cutting out waste, whilst ensuring quality. This approach can be applied to all aspects of a business.
-From design, through production to distribution

46
Q

Problems caused by Poor Quality

A

-Productivity problems
-Reduces profitability
-Reduces customer satisfaction
-Increases costs

47
Q

If Labour Productivity increases…

A

Unit cost decreases

48
Q

Formula for Capacity Utilisation

A

Actual output per annum/maximum possible output x100

49
Q

If Capacity Utilisation increases…

A

Unit cost will decrease.

50
Q

Outsourcing

A

The business practice of hiring a party outside a company to perform services or create goods.

51
Q

What is Mass Customisation?

A

The personalisation or custom-tailoring of goods or services to meet customer needs - but at near mass-production prices.
-Collaborative Customisation
-Adaptive Customisation
-Transport Customisation
-Cosmetic Customisation

52
Q

How can Technology Improve Efficiency?

A

Manufacturing
-Robotics
-Automation
-Planning
-Operating

Design
-Create new products
-CAD, CAM

53
Q

Advantages and Disadvantages of Quality Assurance

A

Advantages:
-Encourages teamwork
-Reduces costs

Disadvantages:
-Change in culture (difficult to achieve)
-May take time to bed in

54
Q

Main Types of Inventories

A

Raw materials and components

Work in progress

Finished goods

55
Q

Economies of Scale

A

The benefits of being larger
-Improving scale of production brings about efficiency
-Can affect unit costs
-Needs investment

56
Q

Quality Assurance

A

Improves quality throughout the business

57
Q

Inventory Control Chart

A

-Buffer level: minimum level of stock
-Re-order level: the level at which business needs to order again
-Lead time: how long it takes to deliver
-Re-order quantity: amount re-ordered

Business (10 decks)

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