Operational Management

Question 1

intellectual capital

Answer 1

the intangible capital of a business that includes human capital, structural capital and relational capital

Question 2

transformational process

Answer 2

an activity or group of activities that transforms one or more inputs, adds value to them, and produces outputs for customers

Question 3

productivity

Answer 3

the ratio of outputs to inputs during production

Question 4

level of production

Answer 4

the number of units produced during a time period

Question 5

production

Answer 5

the process that transforms inputs into outputs

Question 6

efficiency

Answer 6

producing outputs at the highest ratio of output to input

Question 7

effectiveness

Answer 7

meeting the objectives of the business by using inputs productively to meet customers’ needs

Question 8

sustainability of operations

Answer 8

business operations that can be maintained in the long term, for example, by protecting the environment and not damaging the quality life for the future generations

Question 9

labour intensive

Answer 9

involving a high level of labour input compared with capital equipment

Question 10

capital intensive

Answer 10

involving a high quantity of capital equipment compared with labour input

Question 11

job production

Answer 11

the production of a one - off item specifically designed for the customer

Question 12

batch production

Answer 12

the production of a limited number of identical product - each item in the batch passes through one stage of production before passing on to the next stage

Question 13

flow production

Answer 13

the production of items in a continually moving process

Question 14

mass customisation

Answer 14

the use of flexible computer - aided technology on production lines to make products that meet individual customers’ requirements for customised products

Question 15

inventory

Answer 15

materials and goods held by a business and required to allow for the production of products and their supply to the customer

Question 16

inventory management

Answer 16

the process of ordering, storing and using a company’s inventory

Question 17

economic order quantity

Answer 17

the optimum or least - cost quantity of stock re - order taking into account delivery costs and stock - holding costs

Question 18

buffer inventory

Answer 18

minimum inventory level that should be held to ensure that continuous production is possible should deliver delays occur or output increase

Question 19

re - order quantity

Answer 19

number of units ordered each time

Question 20

lead time

Answer 20

the time between ordering new supplies and their delivery

Question 21

re - order level

Answer 21

the level of inventory that triggers a new order to be sent to supplies

Question 22

supply chain

Answer 22

the network of all the businesses and activities involved in creating a product for sale, starting with the delivery of raw materials and finishing with the delivery of the finished product

Question 23

supply chain management

Answer 23

handling the entire production flow of a product (from raw materials to finished product) to minimise costs but improve customer service

Question 24

Just In Time inventory management

Answer 24

aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order

Question 25

Just in Case inventory management

Answer 25

aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels

Question 26

capacity utilisation

Answer 26

the proportion of maximum output capacity currently being achieved

Question 27

outsourcing

Answer 27

using another business to undertake a part of the production process rather than doing it within the business using the firm’s own employees

Question 28

maximum (full) capacity

Answer 28

the highest level of sustained output that can be achieved

Question 29

excess capacity

Answer 29

this exists when the current levels of output are less than the full - capacity output of a business; also known as spare capacity

Question 30

rationalisation

Answer 30

reducing capacity by closing factories/ production units

Question 31

capacity shortage

Answer 31

when demand for a business’s products exceeds production capacity

Question 32

business process - outsourcing

Answer 32

a form of outsourcing that uses specialist contractors to take responsibility for certain business functions, such as human resource and finance