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Business Studies > Improving Operational Performance (4) > Flashcards

Improving Operational Performance (4) Flashcards

1
Q

Name the 6 operational objectives

A

1) Speed of Response
2) Flexibility
3) Reduced Unit Costs
4) Quality Costs
5) Dependability
6) Added Value

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2
Q

What is the reason for the ‘Dependability’ objective?

A

Makes the business seem more reliable to customers.

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2
Q

What is the reason for the ‘Environmental Issues’ + How can it be achieved?

A

1) Reason; Makes the business seem more ethical
2) How; Keeping up with environmental issues

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3
Q

Name 4 reasons as to why Quality is important

A

1) Provides a USP + gives customers a reason to buy the product
2) Allow a business to charge a premium price + increase profit margins
3) Enable a business to increase sales + market share
4) Enhance reputation + brand loyalty leading to repeat purchases

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4
Q

Define Kaizen (2)

A

a) A Japanese concept of continuous improvement to increase efficiency
b) Staff are empowered to suggest changes

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5
Q

What is Quality Management?

A

The process by which a business meets the customers’ expectations in relation to quality.

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6
Q

What is Quality Control? (2)

A

a) Checking a good/service before it is delivered to a customer
b) Normally relies on an inspection process

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7
Q

What is Quality Assurance? (2)

A

a) Checking of a good/service at each stage of its production
b) Aims to avoid mistakes by getting the product right the first time.

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8
Q

What is Total Quality Management?

A

All staff check all items at all stages of the production process for its faults

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9
Q

What are the three ways to measure operational performance?

A

1) Labour Productivity
2) Unit Costs
3) Capacity Utilisation

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10
Q

What is labour productivity?

A

The volume of output that is obtained from each employee.

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11
Q

What is the equation for labour productivity?

A

Number of employees at work

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12
Q

Define the term ‘labour intensive’

A

When a business uses people to produce their goods/services instead of machines.

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13
Q

What is the equation for unit costs?

A

Total output in period (units)

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14
Q

When do economies of scale arise?

A

When unit costs fall as output /sales increases.

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15
Q

Define capacity utilisation

A

The percentage of a firm’s total possible production level that is being reached.

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16
Q

What is the equation for capacity utilisation?

A

Maximum possible output

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17
Q

What is a symptom of a business experiencing diseconomies of scale?

A

Output falling and unit costs rising

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18
Q

Name 5 factors that can affect labour productivity

A

1) Motivation
2) Investment in technology
3) Introducing new management
4) Improvements in training
5) Invest in reward systems

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19
Q

What is lean production?

A

An approach which includes practices that reduce waste in the operational process.

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20
Q

Name 3 examples of Lean Production

A

1) Just In Time
2) Kaizen
3) Cell Production

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21
Q

Name 3 ways to deal with under-capacity

A

1) Introduce overtime/employ more staff
2) Sub-contract in work from another business
3) Find new markets (new segments or new markets)

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22
Q

Name 3 ways to deal with over-capacity

A

1) Increase promotions (reduce price, increase social media advertising)
2) Expand (move to a bigger factory, more machines and more staff)
3) Sub-contract out production to another business

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23
Q

What are the 2 aims for Just-In-Time stock?

A

1) Zero stock of raw materials
2) Zero stock of finished goods

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23
Q

Name 2 issues with holding stock

A

1) Cost of storage
2) Obsolescence risks (going out of date/fashion

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24
Q

Name the 3 elements of Just In Time stock

A

1) Produce to order or Pull Production (not waste of unwanted goods)
2) Stocks are only delivered when needed (no storage of parts)
3) Finished products are dispatched quickly (no stock of finished goods)

25
Q

What is ‘Pull’ Production?

A

Only producing if there is an order

26
Q

What is ‘Push’ Production?

A

Producing first then trying to sell it afterwards

27
Q

What are Quality Circles?

A

Groups of employees brought together to identify potential improvements.

28
Q

What is Cell Production?

A

a) Organizing production around teams instead of a production line.
b) Each team is set a production target and responsibility for suggesting improvement.

29
Q

What is the definition of capacity?

A

A measure of how much output a business can achieve in a given period.

30
Q

Name 3 advantages of operating at 100% capacity

A

1) Little to no assets are left idle
2) Minimizes unit costs
3) Higher chance of reaching break even output

31
Q

Name 3 disadvantages of operating at 100% capacity

A

1) Demotivating if its long-term (for employees)
2) Less time for quality control
3) Production equipment may need repair

32
Q

Name 3 advantages of using JIT

A

1) Lower chance of stock perishing or becoming obsolete as its only purchased when needed
2) Lower rent as smaller storage would be needed
3) Less working capital is tied up in stock as its only purchased when needed

32
Q

Name 3 disadvantages of using JIT

A

1) Unable to meet any unexpected orders as there isn’t any spare stock
2) May not qualify for bulk-buying discounts
3) Heavily reliant on suppliers being on time and efficient.

32
Q

What is the link between capacity utilization and unit cost?

A

The higher the capacity utilization, the lower the fixed cost per unit is and vice versa.

33
Q

Name 3 drawbacks of using new and updated technology

A

1) Finance, it can be costly
2) Demotivating as labor is being replaced with capital
3) Resistance

34
Q

How do Computer-Aided Manufacture and Design make operations easier? (2)

A

a) It makes it easier for businesses to alter their designs
b) Speeds up the speed of design process

35
Q

Name 3 advantages of capital intensity

A

1) No motivation or training needed
2) Long term = very efficient
3) Likely to be cost effective

35
Q

Name 2 disadvantages of capital intensity

A

1) Costly to set up and maintain
2) Machinery lacks flexibility

36
Q

Name 2 advantages of labor intensity

A

1) Flexibility
2) Likely to be cheaper on a smaller scale production

36
Q

Name 3 disadvantages of labor intensity

A

1) Breaks + Holidays
2) Recruitment Costs
3) Re-training + Motivation

37
Q

Suggest 4 negative impacts of increasing labor productivity

A

1) May lead to burnout
2) May compromise quality
3) May be costly
4) Time-consuming to find effective ways to keep employees motivated

37
Q

Name the 2 benefits of TQM

A

1) Reduces waste + defects
2) All employees feel empowered (training + new skills)

38
Q

Name 2 drawbacks of TQM

A

1) Time consuming to introduce
2) Cost of training employees

39
Q

What are 2 negatives of too little supply?

A

-Missed orders and revenue
-Lose future orders due to failure to meet demand

40
Q

What is a negative of too much supply?

A

-May mean extra costs and wastage

41
Q

Name 3 ways to increase supply

A

1) Hire temporary staff
2) Use outsourcing
3) Use JIT and produce to order

42
Q

What is outsourcing?

A

Sub-contracting business to another business

42
Q

Name 2 cons of outsourcing

A

1) Can’t fully control quality
2) May lead to an over-reliance to that sub-contractor

43
Q

Name 3 pros of outsourcing

A

1) Use specialists which may lead to an increase in quality
2) Can focus on core competency
3) Avoids the capital investment needed

44
Q

Name 3 ways to improve the speed of response

A

1) Produce to order
2) Use technology to order and monitor distribution
3) Sub-contract work out to another business

45
Q

Name 4 ways to improve dependability

A

1) Train staff
2) Have spare capacity available
3) Offer mass-customization
4) Use quality assurance system

46
Q

Name 4 ways to improve flexibility

A

1) Employ flexible workforce
2) Offer flexible lead times
3) Being able to offer varied order sizes
4) Use technology to offer flexible production systems

47
Q

Name 4 benefits of having multiple suppliers

A

1) To ensure backup if one supplier fails
2) To be able to increase order size
3) To be able to compare suppliers’ quality, prices and reliability
4) To prevent being too dependent on one supplier

48
Q

Name 3 benefits to having a flexible workforce

A

1) Only pay staff when you need to
2) Less costly in terms of employee rights+ benefits
3) Improves the business’ flexibility

49
Q

Name 2 draw backs to having a flexible workforce

A

1) Employees may not feel as secure in their job
2) Employees may not feel as motivated

50
Q

State the 4 influences on the amount of stock a business can hold

A

-Storage costs
-Obsolescence risk
-Demand
-Stock out costs (what the cost would be if the business didn’t have enough stock)

51
Q

What is meant by the re-order level?

A

The level at which a new order is placed

52
Q

What is meant by the re-order quantity?

A

The amount ordered

53
Q

What is meant by lead time?

A

The time between when an order is made and how long it takes to arrive

54
Q

What is meant by buffer level of inventory?

A

The minimum amount of stock a business wants to hold to cover for emergencies.

55
Q

What are the 4 things a business should look for in a supplier?

A

1) Reliability
2) Price
3) Quality
4) Flexibility

Business Studies (4 decks)

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