Making operational decisions to improve performance: managing inventory and supply chains Flashcards
What is producing to order
a business production strategy that typically allows consumers to purchase products that are customized to their specifications.
What are 3 ways of matching supply to demand?
- outsourcing
- use of temporary and part time employees
- producing to order.
Influences on amount of inventory held
interpreting inventory control charts
- lead time
- re-order levels
- buffer level of inventory
- re-order quantities.
Disadvantages of holding buffer stock
Advantages of holding buffer stock
- Negotiate a better deal with suppliers>if we have buffer stock it is likely we are purchasing large quantities>purchasing economies of scale
- Manage uncertainty- we have extra stock we can reach into where we see unexpected rises in demand
Advantages of outsourcing
Reduce costs>if supplier if able to supply at a lower cost i.g through economies of scale
-access specialist suppliers with greater capabilities and higher quality
Disadvantages of outsourcing
Benefits to part time/temp employees
-can be useful for periods where there a sudden surge in demand
-cheaper>paid hourly and not a salary>lower labour costs
-flexibility>business schedule when exactly we want or need them
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Disadvantages of part time/temporary workers
- Part time so they only work there as it fits their lifestyle>less loyal>less motivated
- more part time workers mean higher span of control(more subordinates)>it is more work for the manager>could impact communication throughout the business
- lower staff retention>will need to train more workers>more costs for business to train workers and recruit them too. decreased profits
Influences on the choice of suppliers
Price-may go for a supplier who wants lower prices (though this COULD comprimise on quality)
Influences on the choice of suppliers
Price-may go for a supplier who wants lower prices (though this COULD comprimise on quality)
-Reliability- want someone who will provide when you need them to
Important of efficiency
labour costs usually one of the largest costs for a firm>keeping it low keeps increased profits
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Two methods of improving quality
quality assurance
quality control
Quality assurance features
Quality assurance-focusses on the prevention of defects during production process.
Is a process based approach
Manages quality during each step of the production process.
Quality control features
Focusses on the identification of defects
Reactive process
Product based approach
Verify the quality before a good is sent off