L05-Purchasing and Production

Question 1

What does the Purchasing Department do?

Answer 1

-getting the good and services the business needs
-ensuring timely delivery’s
-ensures that orders were received in full and paid in time

Question 2

Mention 3 functions of the Purchasing Department.

Answer 2

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)

Question 3

Mention and explain the importance of relation of the purchasing department with others.

Answer 3

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.

Question 4

Mention 3 factors one should find in a supplier.

Answer 4

Choose 3:
-Quality and reliability
-Speed and flexibility
-Value for money
-Strong service and clear communication
-Financial security (the supplier should be financially stable)

Question 5

What are the steps in selecting the right supplier?

Answer 5

1) Identifying business needs
2) Conducting market research
3) Shortlist the candidates
4) Interview finalists
5) Make a decision

Question 6

What does an Inventory Management System do?

Answer 6

The process of ensuring that appropriate amounts of stock are maintained by the business

Question 7

Mentions an advantage for Overstocking.

Answer 7

Having too much is better than none

Question 8

List 3 disadvantages to Overstocking.

Answer 8

-Money that could be used elsewhere
-Inventory could go out of fashion and becomes very difficult to sell (loss)
-Higher storage and security costs

Question 9

List 3 disadvantages to Under-stocking.

Answer 9

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

Question 10

What is a Periodic inventory system?

Answer 10

A system with a physical count at various periods of time

Question 11

What is a Permanent inventory system?

Answer 11

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)

Question 12

Mention 3 benefits to having an inventory system.

Answer 12

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

Question 13

List 3 consequences to not having a sound inventory system.

Answer 13

-Level of inventory will decrease over periods of time due to clerical errors,shoplifting and employee theft.
-Misplaced inventory.
-Human error.

Question 14

What are the types of production?

Answer 14

1). Unit/Job production
2). Mass/Flow production
3). Batch Production

Question 15

How does Unit production work?

Answer 15

Producing items that meet specific requirements for the customer one by one

Question 16

List 3 Advantages to Unit Production.

Answer 16

-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.

Question 17

List 3 disadvantages to Unit Production.

Answer 17

-High cost to buy
-Production time will be longer
-Investment in machinery will be higher

Question 18

How does Mass production work?

Answer 18

They manufacture large quantities of standardized products.

Question 19

List 3 advantages of Mass production.

Answer 19

Choose 3:
-Increase in productivity
-Uniformity in product
-Lower cost (machinery reduces labour costs)
-Less errors (machinery reduces human error)

Question 20

List 3 disadvantages to Mass production.

Answer 20

Choose 3:
-Less flexibility in product
-Demotivated employees
-Loads of inventory (products build up before being sold)
-Pollution

Question 21

How does Batch production work?

Answer 21

It’s a method where a group of identical products are produced at the same time instead of one at a time

Question 22

List 3 advantages to Batch production.

Answer 22

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

Question 23

List 3 disadvantages to Batch production?

Answer 23

-Increase in storage costs
-Errors made will affect the whole batch so wasted time and money
-Products cannot be personalised

Question 24

What is Economies of Scale?

Answer 24

The Benefits given to larger businesses over smaller ones

Question 25

Mention 3 examples of INTERNAL economies of scale.

Answer 25

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)

Question 26

What are Diseconomies of Scale?

Answer 26

When a company or business grow to large to handle so cost per unit increases

Question 27

Mention 3 INTERNAL diseconomies of scale and explain why they happen.

Answer 27

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).

Question 28

What is Automation?

Answer 28

The application of technology in the process to achieve outcomes with minimal human input.

Question 29

Mention 3 benefits of automation.

Answer 29

Choose 3:
-More efficient workflows
-Increased productivity
-Reduced cost of operations
-More accurate workforce
-Better customer service

Question 30

List 3 Disadvantages of automation.

Answer 30

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

Question 31

What is Sustainable Production?

Answer 31

Sustainability consists of fulfilling the needs of the current generation without compromising the needs of future generations

Question 32

How can business be more sustainable?

Answer 32

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

Question 33

Mention 3 negative effects that production does on the environment.

Answer 33

Choose 3:
-Global Warming
-Air pollution
-Water pollution
-Soil pollution
-Our own health
-Destruction of wild life

Question 34

What does the Government do to enforce sustainable production?

Answer 34

The business are inspected on a regular basis by the Environment Permitting and Industry Unit

Question 35

What is SDG 11?

Answer 35

It is an objective that makes cities more safe and sustainable while having access to affordable housing

Question 36

What are the goals of SDG 11?

Answer 36

-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

Question 37

Mention 4 factors that influence the Business location.

Answer 37

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)

Question 38

What is a Footloose Industry?

Answer 38

A industry which is not tied to any location and can relocate to other places without effecting the factors of production

Question 39

What is an Industrial Inertia?

Answer 39

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