L05-Purchasing and Production Flashcards
What does the Purchasing Department do?
-getting the good and services the business needs
-ensuring timely delivery’s
-ensures that orders were received in full and paid in time
Mention 3 functions of the Purchasing Department.
Choose three.
-Assessing the needs of the business (all the necessary materials)
-Conducting research (to find better products with little price)
-Comparing and negotiating prices (best possible prices)
-Coordinating deliveries (design delivery schedules,ensure deliveries arrive on time)
-Maintain a good supplier relationship
-Monitoring quality performance of purchased goods
-Compliance with business protocols (following protocols for purchase and budget)
Mention and explain the importance of relation of the purchasing department with others.
Sales Department- The purchasing department get the inventory in place for them.
Production Department- The purchasing department are responsible for buying all the necessary tools and raw materials.
Finance Department- There has to be ongoing feedback in both directions as the finance department knows how much cash flow there is to use.
Mention 3 factors one should find in a supplier.
Choose 3:
-Quality and reliability
-Speed and flexibility
-Value for money
-Strong service and clear communication
-Financial security (the supplier should be financially stable)
What are the steps in selecting the right supplier?
1) Identifying business needs
2) Conducting market research
3) Shortlist the candidates
4) Interview finalists
5) Make a decision
What does an Inventory Management System do?
The process of ensuring that appropriate amounts of stock are maintained by the business
Mentions an advantage for Overstocking.
Having too much is better than none
List 3 disadvantages to Overstocking.
-Money that could be used elsewhere
-Inventory could go out of fashion and becomes very difficult to sell (loss)
-Higher storage and security costs
List 3 disadvantages to Under-stocking.
Choose 3:
-Production may stop to lack of materials
-The business won’t be able to fulfill customers’ orders on time.
-It will never be possible to meet unexpected large orders
-Business will be viewed as unreliable and reputation will be damaged
What is a Periodic inventory system?
A system with a physical count at various periods of time
What is a Permanent inventory system?
It is computerized and it keeps track of balances continuously with automatic updates when products are received or sold.
(With this system you still need to do a periodic inventory check from time to time)
Mention 3 benefits to having an inventory system.
Choose 3:
-Maintaining precise inventory data,so you can better forecast inventory requirements .
-Increase in productivity and efficiency.
-Greater automation
-Greater organization
-Improved coordination between locations
List 3 consequences to not having a sound inventory system.
-Level of inventory will decrease over periods of time due to clerical errors,shoplifting and employee theft.
-Misplaced inventory.
-Human error.
What are the types of production?
1). Unit/Job production
2). Mass/Flow production
3). Batch Production
How does Unit production work?
Producing items that meet specific requirements for the customer one by one
List 3 Advantages to Unit Production.
-Products will be of high quality.
-Orders will adapt to customer’s requests.
-Worker will be involved in whole process so they are not doing the same process all the time.
List 3 disadvantages to Unit Production.
-High cost to buy
-Production time will be longer
-Investment in machinery will be higher
How does Mass production work?
They manufacture large quantities of standardized products.
List 3 advantages of Mass production.
Choose 3:
-Increase in productivity
-Uniformity in product
-Lower cost (machinery reduces labour costs)
-Less errors (machinery reduces human error)
List 3 disadvantages to Mass production.
Choose 3:
-Less flexibility in product
-Demotivated employees
-Loads of inventory (products build up before being sold)
-Pollution
How does Batch production work?
It’s a method where a group of identical products are produced at the same time instead of one at a time
List 3 advantages to Batch production.
Choose 3:
-Cheaper than unit production
-Machinery can be utilized more efficiently
-Reduces risk of concentrating on one product and allows flexibility
-Overall wastage is reduced by creating needed number of products
List 3 disadvantages to Batch production?
-Increase in storage costs
-Errors made will affect the whole batch so wasted time and money
-Products cannot be personalised
What is Economies of Scale?
The Benefits given to larger businesses over smaller ones
Mention 3 examples of INTERNAL economies of scale.
Choose 3:
-Buying in bulk to reduce costs
-Being able to invest in more advanced technology (more efficiently,less cost)
-Being viewed as more financially stable by banks (offered better financing options and lower interest rates)
-Having access to more skillful labour (+providing proper training)
What are Diseconomies of Scale?
When a company or business grow to large to handle so cost per unit increases
Mention 3 INTERNAL diseconomies of scale and explain why they happen.
Choose 3:
-Technical diseconomies (inefficiency in production process,occurs when they grow faster than they can adapt to).
-Organizational Diseconomies (inefficiencies in workforce management,creates issues with communication and employee productivity).
-Financial Diseconomies (make more money,spend more money).
-Competitive Diseconomies (no competition,no improvement made).
What is Automation?
The application of technology in the process to achieve outcomes with minimal human input.
Mention 3 benefits of automation.
Choose 3:
-More efficient workflows
-Increased productivity
-Reduced cost of operations
-More accurate workforce
-Better customer service
List 3 Disadvantages of automation.
Choose 3:
-Unemployment
-Initial investment costs for machinery
-Technically limitations (technical issues,some tasks can’t be done with automation)
-Reduced human interaction and customer experience
-Loss of skills and dependency on automation
-Cost of repairs and check-ups
What is Sustainable Production?
Sustainability consists of fulfilling the needs of the current generation without compromising the needs of future generations
How can business be more sustainable?
They can;
-Avoid using harmful emission into the air
-Efficient use of energy and resources
-Switching to renewable energies
-Waste avoidance
-Maintaining the biological diversity of ecosystems
Mention 3 negative effects that production does on the environment.
Choose 3:
-Global Warming
-Air pollution
-Water pollution
-Soil pollution
-Our own health
-Destruction of wild life
What does the Government do to enforce sustainable production?
The business are inspected on a regular basis by the Environment Permitting and Industry Unit
What is SDG 11?
It is an objective that makes cities more safe and sustainable while having access to affordable housing
What are the goals of SDG 11?
-Safe and affordable housing
-Affordable and sustainable transport
-Inclusive and sustainable urbanization
-Protecting the world’s culture and heritage
-Reduce the effects of natural disasters
-Reduce impact of cities on the environment
Mention 4 factors that influence the Business location.
Choose 4:
-The area must have the right climate,oil type,etc.
-Nearness to raw material (mostly for bulk-decreasing firms)
-Communication and Transport access
-Nearness to market (located near where customers live)
-Cost (Of land,labour,etc)
-Nearness to other firms (near simulator businesses since shoppers often shop around before buying)
-Availability to Labour
Government Influences (extra help to attract businesses)
What is a Footloose Industry?
A industry which is not tied to any location and can relocate to other places without effecting the factors of production
What is an Industrial Inertia?
A situation where a business once established will decide to stay in its original location even if other factors suggest a new location is better
