M4 Topic 4: Operation strategies Part 2 - inventory management, uality management, overcoming resistance to change, global factors Flashcards
what inventory
the amount of raw materials, work-in progress + finished goods that business has on hand at any point in time
advantages of holding stock
keep up with demand
decrease lead times
disadvantages of holding stock (2)
extra costs (storage, spoilage, theft, and insurance) stock can become obsolete/spoil
how inventory calculated
value of stock sold + value of stock unsold = profit
methods of inventory calculation
LIFO
FIFO
what is LIFO
Inventory pricing/management method where the last goods purchased are the first sold
why is using LIFO prohibited (3)
overstates cost
understates gross profit
lowers tax
what is LIFO Prohibits by
the international financial reporting standards
what is FIFO
the inventory pricing/management method the first goods purchase are the fist goods sold
what does using FIFO allow
Understate costs
Overstate profits
what is just in time
inventory management approach that ensures exact amount of material inputs will arrive only as they are needed
advantages of JIT (3)
less costs(no storage spoilage, obsolescence costs)
higher liquidity
more access to monetary resources
disadvantages of JIT (2)
Cannot respond to changes in demand
Supplier delays cause a disruption in production
what is quality
All the features and characteristics of a product that give it the ability to satisfy customer needs
what is quality management
the processes business undertakes to ensure consistency, reliability, safety and fitness of purpose of the product
list methods of quality management (3)
Quality Control
Quality Assurance
Quality Improvement
what is quality control
inspections at various points in the production process to check for defects
what is quality assurance
: taking series measurements + assessing against pre-determined quality standards
what is quality Improvement
ongoing commitment to improving a business’s products
list internal factors that can cause change (3)
staff
technology
innovation
list external factors that can cause change (4)
Legislation/regulation change
Social change
Technological break through
Change in economic condition
List financial costs that can cause resistance to change (4)
Purchasing new technology
Redundancy of staff
Retraining
Reorganising plant layout
what is inertia
psychological resistance to change due to uncertainty/fear of unknown
what are some strategies to overcome resistance to change
Constructive change (not rapid + employee empowerment ) Proactive to change (anticipate + adjust to changing circumstances)
