Decision making to improve operational performance - 4.3

Question 1

How can you increase efficiency?

Answer 1

• Use capacity effectively
• Increase labour productivity
• Introduce lean production

Question 2

How can you use capacity efficiently to improve efficiency?

Answer 2

If capacity is not used efficiently, resources are wasted. Which increases unit costs because fixed costs are not being spread. Capacity is also important to meet demand and to look ahead for what demand may be.

Question 3

What may a business do if capacity is low?

Answer 3

• Improve marketing to boost sales
• Reduce capacity (close stores)

Question 4

What may a business do if capacity is too high?

Answer 4

• Outsource to other producers, although could ruin brand image as producers do things differently
• Reduce demand in the short term such as raising prices such as airline company’s

Question 5

Why is efficiency important?

Answer 5

Improving efficiency can drive down unit costs to bring the price down or make higher profits. Also important to match what others are doing in a competitive market.

Question 6

How can managers increase labour productivity?

Answer 6

• Invest in technology to complete tasks effectively
• Improve training of employees so staff have more skills
• Change work organisation to improve flow of work and reduce time

Question 7

Why is labour productivity important?

Answer 7

Employees are able to produce more outputs in a given period of time, driving down the cost per unit.

Question 8

What is lean production?

Answer 8

Reducing waste to keep prices low and remain competitive.

Question 9

What is the benefits of lean production?

Answer 9

• Improve quality to reduce defects
• Flexibility to customer demands and market changes
• Sustainability which is beneficial for the environment and company reputation.

Question 10

What are the disadvantages of lean production?

Answer 10

• Business is more vulnerable as no inventory leftover if disruption occurs
• Employees are expected a more active role to check work and identify mistakes early on

Question 11

What is just in time operations?

Answer 11

Aims to reduce flow times in production by only producing what is needed, when it’s needed and amount needed.

Question 12

Why is it difficult to increase efficiency?

Answer 12

• Limited resources such as time, money or skills
• Balancing quality and speed, faster production can lead to decline in quality
• External factors such as market conditions, supply chain disruptions and regular changes.

Question 13

Why is it difficult to increase labour productivity?

Answer 13

• Skills levels
• Motivation can be an issue if workers are not satisfied or engaged with their roles.
  -Poor work environment including inadequate tools and resources

Question 14

How can technology improve efficiency?

Answer 14

• Be flexible to customer needs by tracking behaviour and target specific groups
• Reduce costs, for example, online booking saves time and money meaning less to change if details are wrong
• Allows innovation such as downloading films when you like improving customer satisfaction.