decision making to improve operational performance

Question 1

common operational objective

Answer 1

• costs
• quality
• speed/ flexibility
• dependability
• environmental
• added value

Question 2

what is labour productivity

Answer 2

concerned with the volume of output or value produced by each employee

Question 3

why is labour producivitvy important

Answer 3

• has an effect on efficiency and profitability of a business
• necessary to allow business to remain competitive.

Question 4

factors influencing labour productivity

Answer 4

• access and quality of fixed assets ( equipment)
• skills, ability and motivation of the workforce e
• methods of production organisations
• training of the workforce

Question 5

How is labour productivity calculated

Answer 5

output in period / number of employees at work

Question 6

How to improve labour productivity

Answer 6

• measure performance, set targets
• invest in capital intensive equipment (machinery)
• invest in employee training
• improve working conditions

Question 7

What is economies of scale

Answer 7

Arises when unit costs fall as output increases.

Question 8

how to calculate unit cost

Answer 8

total production costs in period/ total output in period

Question 9

internal economies of scale

Answer 9

• buying economies : buying in bulk
• technical - use of specialists equipment
• marketing: spreading a fixed marketing spend over a larger range of products
• network: adding extra customers or users to a network that is already established
• financial : larger firms benefit from access to more and cheaper finance.

Question 10

what is capacity utilisation

Answer 10

THE CAPACITY OF A BUSINESS IS A MEASURE OF HOW MUCH OUTPUT IT CAN POTENTIALLY ACHIEVE IN A GIVEN PERIOD

Question 11

how is capacity utilisation calculated

Answer 11

Actual level of output/ max potential output x 100

Question 12

How can capacity change

Answer 12

• maintenance on machine work (capital intensive business)

- high absenteeism (labour intensive business)

Question 13

need for capacity utilisation

Answer 13

• measure of productive efficiency

- higher utilisation can reduce unit costs

Question 14

what is lean production

Answer 14

approaches to management that focus on cutting waste within a business but without cutting the quality of the products/services

Question 15

what are the main methods of lean production

Answer 15

Time based management - reduction of wasted time- better organisation of the production methods, multi-skilled staff, trust between workers and managers.
Just in time production - where products are created to order
Kaizen- identifying small incremental changes made by employees that lead to small improvements of quality and efficiency throughout the production process

Question 16

adv and disadv of JIT

Answer 16

\+ lower stock
\+ less working capital tied up in stock
\+ less likelihood of perishing stock 
- supplier issues can stop production all together
- little room for error

Question 17

Meaasurements of quality

Answer 17

tangible:
- reliability
- cost of ownerships
- Intangible
- brand image
- market reputation

Question 18

what is quality assurance

Answer 18

• based on processes
• builds quality into the product
  the processes that ensure production quality meets the needs of customers

Question 19

what is the aim of quality assurance

Answer 19

organise every aspect of the production process and insure all aspects of quality are built into the process.

Question 20

what is TQM

Answer 20

Total quality management
a management philosophy committed to focus on continuous improvements of products.
everyone I workforce is concerned with quality at every stage of production process
eliminates the need to inspect quality

Question 21

Quality control

Answer 21

A focus on inspecting products after the production process. Taking defects out.
- requires sampling
- can be very costly
-

Question 22

what are the three kinds of stock

Answer 22

• raw materials and components
• work in progress
• finished goods

Question 23

stock control chart

Answer 23

the use of SCC allows assessment of the total costs of holding stock and therefore minimise them.

Question 24

what is buffer stock

Answer 24

the minimum quantity a business would want to hold in stock.

Question 25

internal influences on operational objectives

Answer 25

• corporate objectives - the operational objective should not conflict with a corporate objective
• finances - does the business have enough money to fund the operation
• Human Resources - targets for productivity for example will be affected by the investment in training
• marketing

Question 25

internal influences on operational objectives

Answer 25

• corporate objectives - the operational objective should not conflict with a corporate objective
• finances - does the business have enough money to fund the operation
• Human Resources - targets for productivity for example will be affected by the investment in training
• marketing

Question 26

external influences on operational objectives

Answer 26

• economic environment - changes in interest rates impact on the costs of financing capital investment operations
• competitor efficiency
• tech change
• legal and environmental change