KK3: characteristics of operation management

Question 1

Manufacturing businesses 

Answer 1

use resources and raw
materials to produce a
finished physical good.

Question 2

Service businesses 

Answer 2

provide intangible products,
usually with the use of
specialised expertise.

Question 3

Tangible

Answer 3

 is the ability
to be touched.

Question 4

Capital intensive 

Answer 4

is when a business uses a
high degree of machinery
and equipment during its
production process

Question 5

Inventory 

Answer 5

includes the
resources and finished
goods held as stock.

Question 6

Standardised goods 

Answer 6

are goods that are
produced consistently
and are virtually identical
to one another.

Question 7

Characteristics of a manufacturing business 

Answer 7

Production process: Manufacturing businesses tend to have highly
automated processes that are capital intensive

Occurrence of production and
consumption:At manufacturing businesses, production and consumption of the product occur at separate times.

Customer contact: Manufacturing businesses often have a low degree of customer contact during production, as the production stage is separated
from consumption.

Tangibility :The outputs produced by a manufacturing business are tangible.

Storability :The outputs produced by a manufacturing business can
be stored as inventory.

Consistency: Manufacturing businesses produce standardised goods
through mass production.

Question 8

Characteristics of a service business

Answer 8

Production process :Service businesses tend to have production processes that are labour intensive

Occurrence of production and consumption: At service businesses, production and consumption of the service occur simultaneously.

Customer contact: Service businesses tend to have a high degree of customer contact during production as it occurs simultaneously with consumption.

Tangibility: The outputs produced by a service business are intangible.

Storability :The outputs produced by a service business cannot be stored
as inventory.

Consistency: Services are usually not standardised and instead tailored
specifically to fulfil individual customers’ needs.