HL Unit 2

Question 1

What are Stock Control charts

Answer 1

A visual aid to maintaining suitable levels of inventory over a period of time
Predict future stock levels in order to ensure:
- Do not run out of inventory
- Minimise inventory levels

Question 2

What is Supply chain

Answer 2

All the steps necessary to get the good or service from the supplier to the customer
A food supply chain can:
- Reduce costs
- Reduce delivery time to customers
- Improve quality (Can lead to less waste)
- Reduce waste

Question 3

What is Inventory/stock

Answer 3

When a business holds stock of
- Raw materials
- Finished goods
- Work-in-progress

Question 4

Why do businesses hold inventories

Answer 4

Need inputs for production otherwise, workers and machines are idle
Work-in-progress is still in the production line otherwise, the production line stops
Finished goods are waiting to be sold to customers otherwise, sales may be lost

Question 5

What is Just in time Production

Answer 5

• Stock control method where inputs arrive just before they are used in the production process
• Finished products are delivered to consumers as soon as they are produced
• No or limited inventory is held

Question 6

What is Just in Case Production

Answer 6

A stock management strategy whereby the firms hold high levels of stock

Question 7

capacity utilization rate calculation

Answer 7

current output level/maximum output level x 100

Question 8

capacity utilization rate definition

Answer 8

Measures how much a business producers in relation to the maximum possible - Capacity utilization rate measures the percentage of an organization’s potential output that is actually being produced.

Question 9

what should you do if capacity utilization rate is low?

Answer 9

• Boost marketing efforts
• Move to a factory with lower capacity
• Rent out the unused capacity to another business

Question 10

is a high capacity utilization rate good or bad?

Answer 10

In general a high capacity utilization rate is desirable as higher production leads to higher revenue

Question 11

what does it mean if capacity utilization rate is high?

Answer 11

Machinery and employees are used all the time
- Increased possibility of breakdowns
Possibly reduced consumer service quality
- Overworked employees

Question 12

what is a defect product

Answer 12

A defect product is one which is faulty of below the required quality

Question 13

what is a defect rate - what is the calculation

Answer 13

a measurement of how many units of production are defective, or unusable, out of a specific number of units

Question 14

what is productivity rate

Answer 14

ratio of output to intput

Question 15

what is labour productivity

Answer 15

output per worker or per hour worked

Question 16

what is the calculation for labour productivity

Answer 16

Question 17

what is capital productivity

Answer 17

the measure of how well physical capital is used in providing goods and services

Question 18

what is the calculation for capital productivity

Answer 18

Question 19

how do you raise productivity

Answer 19

• train workers
• raise employee motivation
• better management

Question 20

what is operating leverage

Answer 20

a cost-accounting formula (a financial ratio) that measures the degree to which a firm or project can increase operating income by increasing revenue

Question 21

what is cost to buy

Answer 21

• when a product is bought from a supplier
• costs are the price from the suppliers

Question 22

what is cost to make

Answer 22

• when a business makes the product themselves
• costs are from making the tires themselves, which increases fixed and variable costs