IGSCE Definitions - 4.Operations Management Flashcards
Operations Management
Productivity
Productivity is the output measured against the inputs used to create it
The buffer inventory
The buffer inventory level is the inventory held to deal with uncertainty in customer demand and deliveries of supplies
Lean production
Lean production is a term for those techniques used by businesses to cut down on waste and, therefore, increase efficiency, for example, by reducing the time it takes for a product to be developed and become available for sale.
Kaizen
Kaizen is a Japanese term meaning ‘continuous improvement through the elimination of waste.
Just-in-time
Just-in-time is a production method that involves reducing or virtually eliminating the need to hold inventories of raw materials or unsold inventories of the finished product.
Job production
Job production is where a single product is made at a time
Batch production
Batch production is where a quantity of one product is made, and then a quantity of another item will be produced
Flow production
Flow production is where large quantities of a product are produced in a continuous process. It is sometimes referred to as mass production
Fixed costs
Fixed costs are costs which do not vary in the short run with the number of items sold or produced. They have to be paid whether the business is making any sales or not. They are also known as overhead costs.
Variable costs
Variable costs are costs which vary directly with the number of items sold or produced.
Total costs
Total costs are fixed and variable costs combined.
Average cost per unit (unit cost)
Average cost per unit (unit cost) is the total cost of production divided by total output.
Economies of scale
Economies of scale are the factors that lead to a reduction in average costs as a business increases in size.
Diseconomies of scale
Diseconomies of scale are the factors that lead to an increase in average costs as a business grows beyond a certain size.
The break-even point
The break-even point is the level of sales at which total costs = total revenue.