Management Of Operations Flashcards
Describe the factors that a firm looks at when choosing a location for their organisation.
- Customers - Firms like to be located near their customers as to encourage them to buy products which means the firm can maximise their sales
- Suppliers - Firms like to be near suppliers so that products can enter the premises quickly, allowing production to flow.
- Access to raw materials - Many food manufacturers will locate next to their source of produce eg: farms producing their carrots. This allows for companies to freeze their products to keep them fresher for longer
- Government assistance - Firms may be attracted to a particular location as the government is offering a grant to set up in run down areas that experience low levels of economic growth
- High unemployment - Firms can offer low wages when hiring workers in areas of high unemployment as the workers have little choice but to accept the low wage. The can lower costs of a firm
- Near good infrastructure eg: train station, motorway, ports etc. - Being near good infrastructure makes it easier for cars to park and customers to get access
What is the definition of over-stocking?
When a firm has surplus stock and failed to sell-out of their products
What is the definition of under-stocking?
When a firm has a shortage or runs out of stock and has to turn customers away
Describe the problems associated with over-stocking.
- The firm loses profit because money is spent keeping stock fresh through storage costs.
- If the product is perishable, and goes past the best before date, it can’t be sold at all and lose profits
- The unsold stock may have to be lowered in price which means the firm will fail to maximise sales revenue
- Having too much stock means that it’s easy for employees to steal the stock
Describe the problems with understocking.
- The firm may have to turn away customers which loses the firm business and in the long-term, gives a bad reputation.
- If stock is late, the firm may have to turn off production line machines. This costs the firm time and money as restarting machines can take hours. This is called recalibrating a machine.
- If the firm runs out of stock then it will cost the firm more money to buy in new stock. This is because the supplier will charge more for small quantities to be delivered immediately.
- Under-stocking often means that the firm will have to buy in small quantities and will lose out on bulk-buy discounts.
Identify the methods of production.
Job production
Batch production
Flow production
Describe job production.
The production of a single product. It requires lots of skilled staff and is very expensive to produce.
(eg: wedding dress, bridge)
Describe batch production.
The production of a group of products. Batch production enables items to be created group by group in bulk.
(ex: a bakery will produce white bread loaves then brown bread loaves straight after).
Describe flow production.
This is where products are made continuously.
(ex: Ford will organise the production line so that it will produce 24/7 for a month as it is very expensive to stop as there are many stages involved).
Discuss the advantages and disadvantages of job production.
Advantages
- A high price can be charged which maximises profit
- High customer satisfaction
- Work is interesting so staff are motivated
Disadvantages
- Labour is expensive to hire
- Materials are expensive to buy as they are not bought in bulk
- High wastage costs
Discuss the advantages and disadvantages of batch production.
Advantages
- A variety of the product is produced, which appeals to different customer segments.
- Some bulk ordering is possible.
- Usually requires less skilled workers which reduces wage costs.
Disadvantages
- Stock can build up between processes.
- Takes time to switch from one process to another
- Due to the use of machinery, more space is required for working and storage which is costly and larger premises are required.
Discuss the advantages and disadvantages of flow production.
Advantages
- A high volume of goods is produced and so sales are high
- Opportunities for bulk buying materials so costs are lowered and profits are high
- Labour costs are cheap as their expertise is not required
Disadvantages
- Expensive to set up
- Product is highly standardised so little variety for the customer
- Staff can get bored because work is repetitive
Explain the factors that a business considers when choosing a supplier of raw materials.
Price: A business should find a cheap supplier to keep costs down, resulting in higher profit.
Quality: A business should purchase high quality raw materials if they want the *finished product to be of high quality too.
Location: should choose a supplier near to business, to reduce carbon footprint.
Reliability: A business should deal with a supplier known for being dependable, so that they can deliver on time and allow for production to remain uninterrupted.
Lead time: A business should consider the time it takes for supplies to come in after ordering them so that production is uninterrupted.
Describe methods of ensuring quality products.
Quality Control: checking the product at the ** start & end of production** when it has been finished. However, this can lead to high amounts of wastage.
Quality Assurance: products are checked at each stage of the production process. This reduces the amount of wastage.
Quality Inputs: recruiting skilled staff, training to a high standard, ensure machinery is up-to-date.
Compare quality assurance with quality control.
Quality assurance is to check throughout the production process, whereas quality control is to check at the end.
Quality assurance costs more due to regular checks, whereas quality control costs less due to fewer checks.
Quality assurance allows for less waste as mistakes are found earlier, whereas quality control has more wastage as all wastage is found at end.
Quality assurance may need more staff as it is checked more times, meaning it’s more expensive. Whereas in quality control, the product is checked less meaning less staff is required so it’s cheaper
