Operational Perfromace Flashcards
What’s the definition of efficiency?
Using less inputs to produce more outputs
What are operations?
When inputs are tuned into outputs
How is operational efficiently measured?
CU
Labour productivity
Unit cost
What’s the calculation for CU and the unit?
Actual output DIVIDED by max output X100
=%
What’s the calculation and units for labour productivity?
Output DIVIDED by number of workers
=unit
What’s the calculation and unit for unit costs?
Total costs DIVIDED by total output
=£
What’s capital intensive and labour intensive?
Capital intensive - when a business uses a relatively high proportion of automated equipment
Labour intensive - high proportion of labour in production
What are the inputs of the operations process?
Land
Labour
Capital
Enterprise
Advantages of labour intensive?
Flexible
Help continuous improvement
Unit costs may still be low in low wage locations
Disadvantages of labour intensive?
- risk of problems with employees
- high cost of labour turnover
- need for continuous investment in training
Advantages of capital intensive?
Change of better productivity
Greater opportunities for economies of scale
Low labour costs
Disadvantages of capital intensive?
Significant investment
May generate resistance during the change from employees
What is the definition of economies of scale?
As quantity increases unit cost decreases
What is diseconomies of scale?
As quantity increases so does unit cost
Examples of internal economies of scale?
Purchasing economies - when a business buys in bulk
Managerial economies - employ serialist workers to complete tasks
Marketing economies- business growths + the average cost of advertising falls
Technical economies - when a business invests in new technology and is able to increase productions as a result
