Managing the provision process (2.2)

Question 1

What is the design mix ?

Answer 1

Design mix integrates all aspects of development so that the product can satisfy all likely customer requirements.

Question 2

What does the design mix consist of ?

Answer 2

Aesthetics: Refers to perceived beauty
Function: The product does what it sets out to do
Economic manufacture: Often involves producing a minimum cost whilst maintaining the qualities that buyers are looking for.

Question 3

Other factors that influence product design ?

Answer 3

• Changes in market needs - changing demand of the customer.
• changes in materials (carbon fibre) - meaning the product can be made more efficiently and gives the product a USP
• changes in technology - meaning the same.

Question 4

What is capital intensity ? and what are the benefits and drawbacks ?

Answer 4

Capital intensity is using lots of machinery and technology 
Benefits:
- higher quantity made quicker
- more consistent quality
- cheaper to run in the long run
- less waste materials
Drawbacks:
- high initial costs (expensive equipment)
- High maintenance costs
- one machine stopping can cause production to stop
- increases unemployment
- difficult to customise products

Question 5

What is labour intensity ? and what are the benefits and drawbacks ?

Answer 5

Labour intensity is when work is done by people so hand made.
Benefits:
- can have higher quality
- lower start up capital
- easier to customise products
- charge higher prices
- higher employment levels
Drawbacks:
- lower quantity 
- time consuming
- highly skilled people are needed
- more expensive in the long run

Question 6

What is the definition of capacity ?

Answer 6

is the maximum output that the firm can produce without having to buy in new assets such as machinery, factory space.

Question 7

What is capacity utilisation ?

Answer 7

it is how much of the current capacity is being used

Question 8

What is the equation for capacity utilisation ?

Answer 8

CU = Current output / maximum possible output x 100

Many businesses aim for 90% capacity rather than 100%

Question 9

What are the implications of working at under capacity ?

Answer 9

1) Under utilisation is inefficient because, machinery , buildings and workers are being used.
2) Fixed costs are constant, this means they are being payed for by lower levels of output which means average or unit costs go up making the business less competitive and with lower profit margins
3) Spare capacity can portray a negative image, particularly in a business where it can be seen that it is no longer busy
4) Staff can become bored and demoralised if they don’t have as much to do , especially if they fear losing there job.

Question 10

What are the implications of working at full or over capacity utilisation ?

Answer 10

1) New potential customers may have to be turned away
2) Sudden extra seasonal related orders cannot be met
3) There is no ‘down time’ to fix broken machines or carry out routine maintenance.
4) No time to fix errors or mistakes due to the factory working flat out
5) Staff feel under excessive pressure, leading to increased mistakes and labour turnover
6) The quality of work may fall because of the rush to get orders out.
7) It may be necessary to spend more on staff overtime to get orders completed.

Question 11

What are the ways of improving capacity utilisation ?

Answer 11

By raising demand:

• use of the marketing mix to raise demand and sales
• become a sub contractor for another firm to raise demand and sales

By cutting capacity:

• Shutting down the less efficient factories
• ‘mothball’ factories and re-open them when emand increases again

Question 12

Why is it important to manage stock levels ?

Answer 12

• keep customers happy
• to make profits
• to get repeat purchases (customer loyalty)

Question 13

Benefits of holding stock ?

Answer 13

• keeps customers happy because you can supply them immediately
• can easily deal with refunds an exchanges
• bulk buying is cheaper
• deal with unexpected demand

Question 14

What are the costs of holding too much stock ?

Answer 14

1) the cost of finance tied up in the stock, eg:
- cost of borrowing money to hold stock
- a big opportunity cost of the money tied up in stock
2) the cost of storage and handling the stock
3) some types of stock can deteriorate/get damaged/go out of date
4) too much stock raises production costs, makes the firm uncompetitive or inefficient and lower profits

Question 15

Costs of holding too little stock ?

Answer 15

1) Potential new costumers may be turned down
2) Existing customers - damage to relation/ corporate image
3) May run out of key components - so production line is halted
4) Extra administration costs - to constantly reorder stock
5) Will lose benefits of bulk order - if only small amount of stock is held.

Question 16

What is JIT production ?

Answer 16

JIT helps keep the cost of holding stock to a minimum by planning production so the raw materials or components are delivered daily or very frequently at the appropriate time they are needed.

Question 17

What is needed to make JIT work ?

Answer 17

1) excellent relationship with suppliers
2) Good IT computer systems linked with suppliers
3) Need zero defects from suppliers - because little or no buffer stock

Question 18

Danger/problems of using JIT ?

Answer 18

1) Danger of disruption to production/damage of corporate reputation - if raw materials don’t arrive in time.
2) may be high delivery costs
3) May be more difficult to secure bulk discount because of small orders
4) Extra administration time and cost linked to frequent orders

Question 19

Define productivity ?

Answer 19

is the output per worker

Question 20

Define efficiency ?

Answer 20

Is where the company tries to use resources such as workers and machinery in the most economical way possible

Question 21

How can you improve productivity ?

Answer 21

By:

• using the latest technology
• Investing in more capital equipment (Becoming more capital intensive)
• Better training of staff
• organise the workers more effectively

Question 22

What is lean management ?

Answer 22

Is about using a range of business techniques to minimise waste and the use of inputs in the production of a product.

Question 23

lean production includes:

Answer 23

• short product development time
• JIT stock control and JIT production
• TQM (eg; self checking) and the goal of zero defects
• Continuous improvement groups (kaizen groups) or quality circles
• Bench marking - o raise productivity, efficiency and quality
• Time based management, eg: the use of simultaneous engineering

Question 24

Define quality control ?

Answer 24

Quality control involves checking and inspecting the work once it has been completed, eg a quality control department.

Question 25

Drawbacks of quality control

Answer 25

• quality issues not detected till the end of production
• the cause of the problem is not being focused on
• some defective items may still leave the factory - unless all items are checked.

Question 26

What is quality assurance

Answer 26

Quality assurance is a process or set of systems to ensure the quality of production within the business meets the requirements of customers.

Question 27

What does quality assurance consist of ?

Answer 27

• A documented process which sets out systems inside the business to achieve quality
• the use of self checking by staff rather than quality control
• A ‘zero defects’ target
• quality will be planned for all stages of production.

Question 28

What is continuous improvement ?

Answer 28

• one way of improving quality is using continuous improvement or kaizen groups
• kaizen involves any aspect of improving a product ( such as design, manufacturing, productivity of workers and quality of product)

Question 29

What is TQM ?

Answer 29

TQM

• is an approach which involves getting all employees to focus on quality
• TQM involves the same aspects of quality assurance and continuous improvement

Question 30

What are the problem of bringing in quality systems , such as TQM ?

Answer 30

1) the workers may not be committed or motivated by the goal of quality
2) it takes time to put into place the new systems
3) The cost of setting up the new quality systems
4) the cost of training staff
5) The existing culture may be difficult to change

Question 31

What is consumer protection ?

Answer 31

It is that the goods which a company sell are fit for purpose/do not harm the consumer and are as they are described in advertising